Tax pros, vent here!
Moving on, and in, with Uncle Sam's help

MLK Day 2009 and volunteerism's payoff

Each year, many Americans spend the Martin Luther King holiday as a day of service with nonprofit groups.

Mlk service day logo This year, the MLK volunteer effort got an added boost from President-elect Barack Obama, who reiterated that call to service.

Obama, like countless others, is following up his words with action. Today, Obama, Vice-President Joe Biden and their families are doing their parts by volunteering at various project in Washington, D.C.

Tax credit for good works. Now I realize that tax considerations don't matter to most folks who volunteer for their favorite cause. Tax benefits are secondary (or lower on the list) to your commitment, be it financial or through actual efforts.

But since the tax-saving opportunities do exist, neither should you waste them.

As noted in this AustinWoman story,  spending time helping out your favorite charity certainly is good for the soul. And with just a little more effort, it could also benefit your bottom line at tax time.

True, giving of your time gets shorter shrift than other charitable contributions. The write-offs are usually smaller and they require a bit more attention to detail.

But if you're diligent, you still can get a bit of relief on your 1040. And at tax time, every little bit helps.

Time spent doesn't count on your taxes: Let's start with the bad news. You can't deduct the value of your time or services.

If you make $50 an hour and take an hour off work to help out at a nonprofit, that's not a $50 tax deduction. It's just you doing something nice.

Similarly, you can't do a project for a group, such as create a brochure or set up a website, and deduct the cost of what you would have charged a paying client.

But you can deduct unreimbursed expenses that are incidental to your volunteer work. Say you spend the day with an organization helping it send out a fund-raising letter. If you bought postage stamps, stationery and other office supplies to help get the letter to potential donors, you can deduct those out-of-pocket costs as a charitable gift.

Remember, though, if you're a marketing specialist and helped the group come up with a more polished plea, the time you spent crafting the message is not deductible.

Some travel, other costs do count: And you do get some tax breaks in getting to the group.

Travel costs going from your home to the nonprofit site are deductible. This includes use of your car, as well as public transportation and taxi fares. So are the costs of using your car to help do your favorite charity's work, such as delivering meals to shut-ins.

For folks who've deducted business travel on their taxes, the methodology is the same. You can deduct actual automotive costs related to doing your volunteer work or you can compute your charitable driving expenses using a fixed mileage rate.

This amount, though, is only 14 cents per mile. It's set by statute, rather than adjusted annually for inflation. In extreme instances, Congress does make exceptions. for example, folks who used their vehicles in connection with Hurricane Katrina relief efforts a couple of years ago got to claim special, higher mileage rates.

But such instances are the exception and the increased mileage write-offs are temporary.

So if you do find that a few more deductions will help cut your tax bill and you can claim some of these volunteer-related tax breaks, be sure to claim them.

The words behind the holiday: The historic nature of tomorrow's Inauguration of Obama is underscored by the MLK holiday falling just a day before the first African-American is sworn into the highest office in the land. 

The work of Dr. King and others paved the road to the White House.

You can listen to King's most famous speech, "I have a Dream," here.


Feed You can follow this conversation by subscribing to the comment feed for this post.


Ah geesh, my wife has been doing volunteer horse shoeing for rescue horses for years. We knew we couldn't write off her time, but I never thought about the consumables (travel, shoes, nails, etc).

Live and Learn,

The comments to this entry are closed.