Services for Charitable Causes: Deductions Uncovered

Target Audience: Section 170 Deductions Interest, Charitable Contributions Interest, Tax News and Updates Interet, Accounting Consulting Firm Interest, Charitable Services, Taxpayers, Tax Deductions Interest

While no specific deduction is allowable for the contribution of services, including valuing your time, unreimbursed expenditures incurred in connection with the service may be deductible.

Under Code Section 170(a) deductions are allowed for any charitable contribution paid within the tax year. Under Code Section 170(c) the term charitable contribution is defined as any gift or contribution to or for the use of certain described organizations.

How do these rules work? As a reminder, one cannot deduct the expenses if it has a significant element of personal pleasure, and the expenses have to be incurred because of the service. For example a cruise to the islands to count dolphins would not qualify, nor would buying new tires for a car since the expenses are not incurred primarily because of the charitable service.

But the following are examples of allowable deductible expenses providing the service was provided primarily to further the charitable contributions aims, rather than those of the taxpayer:

Transportation

1. Car expenses (deduction of the actual expenses of gas and oil or use of the standard mileage rate of 14 cents per mile)
2. Rail, air, bus, and taxi fare
3. Shuttle to and from the airport

Parking fees

Travel

1. Meals while away from home are also deductible (meals are not subject to the normal 50% limitation)
2. Lodging (not ever subject to the 50% limitation)

Misc

1. Conference registration
2. Tips or gratuities 
3. Uniforms (provided they do not have general utility)
4. Telephone charges
5. Advertizing

Source: Practical Tax Strategies, Jul 2008

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