Donating to charities is a noble way to support causes that are close to your heart. But if your contributions begin and end with writing a check, you may be missing out on some satisfying volunteer opportunities — and a few tax deductions. IRS rules allow you a number of tax breaks for contributions other than cash that you can make to qualified organizations.
Going the extra mile…literally
Did you know that you can deduct the costs of going to and from a location where you volunteer your services? You can also deduct the costs of driving on behalf of the organization — for example, to pick up or deliver items. To compute your deduction for charitable driving, use the standard mileage rate of 14 cents per mile for 2020, per the IRS, or deduct the actual cost of your gas and oil. Either way, parking fees and tolls are also deductible.
Recouping your expenses
If you’re not reimbursed by the organization, the out-of-pocket expenses you pay in giving services may count as a charitable donation. While you can’t deduct your personal expenses, such as childcare costs accrued while volunteering, you can deduct the costs of buying and cleaning a uniform you’re required to wear while volunteering.
No time to volunteer?
Many charities accept non-cash donations. And giving investments that have increased in value can be a smart tax move. Instead of selling an investment and paying capital gains tax, donate it to a qualified organization. If you held the investment for more than one year, you can generally deduct its fair market value at the time of the donation. Remember, you’ll need a receipt from the organization to claim a tax deduction, and other records also may be required.
Contributions must be made to qualified organizations that meet IRS guidelines. Not sure? Let the NJ CPAs at Magone & Company help. Give us a call today at (973) 301-2300.