Millions of individuals volunteer to help raise funds or perform other tasks on behalf of charitable organizations. When the annual reckoning with the IRS rolls around, the reward for their willingness to help out can take the form of write-offs for unreimbursed expenses incurred while they do volunteer work.
But what’s in store at tax time for animal rescue volunteers who work on behalf of organizations like the Humane Society of the U.S. and the ASPCA? Are they also entitled to claim charitable deductions for their unreimbursed expenses?
The IRS says such outlays are nondeductible personal expenditures, unless the rescuers establish that they incur the expenses to further the efforts of charitable organizations—for instance, foster care for stray animals.
A U.S. Tax Court decision in 2011 is good news for animal rescue volunteers across the nation. Jan Van Dusen of Oakland used her home to care for over 70 abandoned cats. She shelled out about $12,000 for vet bills, food, and other care expenses and deducted those payments as charitable contributions.
The IRS’s ever-vigilant computers bounced her return. The agency’s predictable response: Jan’s use of her home meant that the write-offs in issue were nondeductible personal expenses.
Undeterred, the cat rescuer took the dispute to the Tax Court, where she argued her own case. Jan persuaded the court that she rendered services for an IRS-approved charity that specialized in the neutering of wild cats. The decision opens the way for volunteers to claim deductions for rescued animals cared for within their homes, provided they can distinguish between expenses for rescued animals and expenses for their personal pets.
Paperwork. Volunteers shouldn’t rush to uncork the bubbly. Jan didn’t completely prevail. The court curtailed her write-off because she failed to comply with the substantiation requirements. Jan could’ve deducted the entire $12,000, had she kept the required records for pertinent expenses.
The key requirement is a letter from the charity acknowledging your volunteer work for expenses of $250 or more. The charity must issue it prior to the due date for the return in question. If the IRS disputes your deductions, expect the agency to ask for a letter that authorizes you to keep animals in your home.
Lots of out-of-pocket outlays pass muster. Animal rescue volunteers can claim charitable deductions for many kinds of outlays. Qualifying expenditures include: animal feed; medicines; cat litter; litter boxes; pet dishes; cleaning supplies, garbage bags, paper towels, laundry detergent and dish detergent; animal bedding; animal toys such as those that help with behavior modification and well-being; fees paid to veterinarians and behavior trainers; and food for volunteers building temporary shelters for pets evacuated from flood zones in hurricanes.
Travel. Other often-missed outlays become available to rescuers as soon as they leave their homes. Allowable deductions include travel expenses to and from animal shelters, veterinarians, committee meetings, fundraising events, and so on. Volunteers who travel to and from their charitable chores by planes, trains, buses, or taxis should keep track of their fares and claim them as travel expenses.
Car costs. There are two options for handling auto expenses: The first option is to deduct the actual cost of gas and oil. Unlike write-offs for business driving, you can’t claim depreciation because that isn’t an actual cash payment. Nor can you claim insurance and repairs unless you use the car only for charitable driving or the repairs are directly attributable to that use.
The second option is to make the paperwork simpler by claiming a standard mileage rate. The standard rate is 14 cents a mile.
Tip. Whether you use the mileage allowance or drive a gas guzzler and claim actual costs, remember to deduct parking fees and bridge or highway tolls, as well.
Example. In the course of your charitable work this year, you drive 1,000 miles and shell out $50 for parking charges. Your allowable deduction is $190 (1,000 miles times 14 cents equals $140, plus $50 parking). Or, if you pay more for gas and oil than the mileage allowance, you can deduct actual costs, plus parking.
Julian Block writes and practices law in Larchmont, N.Y. and was formerly with the IRS as a special agent (criminal investigator) and an attorney. He is frequently quoted in the New York Times, the Wall Street Journal, and the Washington Post, and has been cited as: “a leading tax professional” (New York Times); “an accomplished writer on taxes” (Wall Street Journal); and “an authority on tax planning” (Financial Planning Magazine).This article is excerpted from “Julian Block’s Tax Deductible Travel and Moving Expenses,” available as a Kindle at Amazon.com and as a print copy. Learn more about saving money by clicking here.