If you do volunteer work for a charitable organization and have not kept track of your out-of-pocket expenses, you might be passing up an excellent opportunity to lower your tax bill. To qualify, your unreimbursed expenses must relate directly to the charity, and you must itemize your deductions on your tax return. Here is a brief rundown of some possible deductions.
Volunteers may deduct the cost of phone calls, postage stamps, supplies, and other out-of-pocket costs incurred in their volunteer work. For volunteers who are required to wear a uniform, the cost of buying and cleaning uniforms is deductible if they are unsuitable for everyday wear.
The cost of your time, no matter how valuable it may be, is not deductible. That’s true even if you would normally be paid for the type of service you contribute. For instance, accountants who perform free consulting for charities can’t deduct what they would normally charge for their services.
Using your car in connection with volunteer work can earn you a deduction. The standard mileage rate for volunteers who use their own cars is 14 cents per mile. Alternatively, you may deduct your actual unreimbursed expenses for gas and oil – but not maintenance, depreciation, or insurance. Either way you choose, related parking fees and tolls are deductible as well.
If you travel overnight for charitable purposes, your expenses are deductible as long as they are reasonable in amount and not connected with personal activities or any element of recreation.
Special rules apply to conventions. Travel and other out-of-pocket expenses related to attendance at a convention for volunteers are deductible only if you have been chosen as a delegate to represent the organization.
Finally, just remember that it is up to you, the volunteer, to substantiate your deductions. If you take these deductions, you should be prepared to show the IRS the connection between the costs claimed and the charitable work performed.
Don’t fall for this child tax credit scam
The IRS has issued a consumer alert to warn people about a new scam involving the child tax credit.
The 2003 Tax Relief Act increased this year’s child tax credit from the previous $600 to $1,000. If you claimed the credit on your 2002 tax return, you may be eligible for a rebate check of up to $400 for each qualifying child. Starting July 25, these rebate checks will be mailed to about 25 million taxpayers. You don’t have to apply, fill out any forms, or take any action to receive your check.
So don’t become a victim to this latest tax scam aimed at potential recipients of child tax credit rebate checks. According to the IRS, con artists are calling taxpayers with claims that they can speed up payments of the advance child tax credit. The catch is that the taxpayer must agree to a $39.99 charge to his or her credit card.
Taxpayers who agree to the charge and who provide a credit card number or other sensitive personal information could find a much larger charge to their account. By the time the taxpayer realizes something is wrong, the scam operator is long gone.
The IRS reminds taxpayers that no person or organization can speed up the payment of tax benefits. Taxpayers do not need to take any action to receive their rebate checks for the child tax credit.
The Treasury Department will begin mailing checks for the advance payment of the increased child tax credit on July 25, with most checks mailed by August 8. These mailings will cover eligible taxpayers who filed their 2002 tax returns by April 15. As the IRS processes returns from taxpayers who filed after that date, it will schedule advance payments on a weekly basis.