Commonly Overlooked Deductions for Charitable Contributions

“Deducting charitable contributions may help you lower your tax bill, especially if you are actively involved in ministry.”~Mitzi E. Sullivan, CPA

20160404-Joplin 2013-2

For taxpayers who itemize, deducting charitable contributions may help you lower your tax bill, especially if you are actively involved in ministry.  Don’t limit your deductions to cash contributions.  Keep a record of charitable miles and non-cash contributions made throughout the year.  You may be surprised at how much you can save in taxes.

In General

Deductions for charitable contributions must be:

  1. contributed to a qualified organization or an agent acting on behalf of a qualified organization.
  2. unreimbursed,
  3. directly connected with the services you give,
  4. incurred only because of the services you give,
  5. not personal, living or family expenses, and
  6. not given to a specific individual.

You can verify whether a charity qualifies at  Churches and governmental units (such as public schools and universities) automatically qualify and will not be listed in the database.

Note that expenses must be incurred for services you give.  This does not include expenses incurred for services that your child gives.

Charitable mileage deduction

You can deduct 14 cents per mile, or actual incremental costs, for miles driven for qualified charitable purposes, plus tolls and parking.

Examples may include:

  • round trip mileage to volunteer at a charitable event, gala, fundraiser, etc.
  • round trip mileage to volunteer for disaster relief
  • round trip mileage incurred on a mission trip
  • round trip mileage to volunteer at a federal park
  • round trip mileage to choir practice
  • round trip mileage as a volunteer chaperon
  • round trip mileage to donate clothing and household items

You have the option to deduct actual incremental out-of-pocket costs (such as gas and oil) in lieu of the 14 cents per mile.  When gas costs are high, or you are driving a large vehicle, this method will give you a better deduction.

Travel and lodging deduction

You may be able to deduct travel and lodging costs, including meals, directly connected, and incurred only because of, the service you provided to a qualified charitable organization that required you to be away from home overnight.  The IRS specifies that there should be “no significant element of personal pleasure, recreation, or vacation in the travel” and makes important distinctions based on the level of involvement.  It’s okay to enjoy the work, just make sure you are working.  And make sure you meet all of the requirements in the “In General” section above.

Unreimbursed out-of-pocket expenses

As long as expenses meet the criteria listed in the “In General” section above, you may be able to deduct expenses that you paid on behalf of a qualified charity.

Examples may include:

  • Food and paper goods purchased to provide meals at a qualified charitable activity (youth group, support raiser for a missions agency, etc.)
  • small tools and equipment (contributed to the organization, or with no residual value)
  • printing supplies
  • postage

Gently used clothing and household items

Remember to get a receipt for your donated items and note on the receipt the fair market value of donated items.

Documentation Requirements

According to the IRS, “Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.

To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.

Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.”

Check with your CPA

The expenses discussed in this article are examples of expenses that may be deductible, depending on your unique circumstances.  Discuss them with your CPA to help you decide whether or not to claim a deduction.  The information contained in this article is for discussion purposes only and is not to be considered tax advice.

~Mitzi E. Sullivan, CPA

M.E. Sullivan is a cloud based professional services provider specializing in cloud accounting.

Author: sullivancpa

With over twenty years in nonprofit, public, and private accounting, Mitzi has developed a strong talent for analyzing financial information and implementing creative solutions. Her technical abilities combined with her experience in working with personnel and clients enable her to offer the sound financial advice and practical accounting solutions that successful entities demand.

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