Is volunteer work tax deductible? And if so, what kind of volunteer tax deductions could you take advantage of as a taxpayer? Or would claiming volunteer expenses on taxes be wrong?
The truth is that being a volunteer coach impacts the lives of the people you coach. So, you'll be happy to hear that you can receive a tax break for some of the costs you incur while volunteering in some circumstances.
While your time is not deductible, you may be able to write off other unreimbursed expenses and lower your tax obligation if you itemize. However, the organization you volunteer for must be a qualifying 501(c)(3) nonprofit, tax-exempt organization as recognized by the IRS.
How to Deduct Volunteer Expenses from Taxes
A 501(c)(3) charity is a nonprofit organization that has been granted tax-exempt status by the IRS. All charities do not have tax-exempt status; any volunteer coaching expenses you incur with those organizations are not tax-deductible. For you to claim these expenses on your return, the organization you volunteer for cannot only be a charity, it must also have 501(c)(3) tax-exempt status.
When you don't know the organization’s tax-exempt status, you can ask the group’s director for a copy of their 501(c)(3) determination letter and letter of affirmation. And you can also call the IRS Tax Exempt Customer Account Services line. In addition, you can visit the IRS website and check the group’s status with an online search feature known as the Tax Exempt Organization Search, formerly known as the Select Check tool.
Interpreting IRS Publication 526
IRS Publication 526, Charitable Contributions, lays the ground rules for all topics regarding volunteering, donations or other charitable contributions. Under the section, Contributions You Can Deduct, you will find a subsection entitled "Out-of-Pocket Expenses in Giving Services." This part of IRS Publication 526 details how to determine what you can and cannot deduct as a volunteer coach.
The IRS allows volunteers to claim many unreimbursed expenses, but there are clear rules in place that determine – and limit – how these expenses are claimed. For example, when claiming a volunteer nonprofit tax deduction, you can deduct the actual cost of gas and oil required to get you to and from coaching or for any driving you do in the course of performing your volunteer duties. If you don’t want to figure the actual percentage of gas and oil you use, you can deduct at a standard charitable mileage rate.
The purchase of equipment for any qualifying organization is also tax-deductible, as are the costs associated with buying and cleaning uniforms for you or your team. If you must buy and clean special football coaching supplies or volleyball coach attire you're unlikely to use elsewhere, this can be tax deductible.
Certain travel-related expenses are tax-deductible. However, only expenses directly tied to volunteering and not personal enjoyment can be claimed. Check the Out-of-Pocket Expenses in Giving Services subsection of IRS Publication 526 for more information regarding claiming travel expenses.
Exceptions and Limits on Deductions
The IRS places limits on the amount of the expenses you can claim for your volunteer coaching. Typically you can write off certain contributions up to 60 percent of your adjusted gross income, but, as to be expected with Uncle Sam, some criteria and rules must be met. Depending on the type of contribution and to which organization it was made, you may be limited to 20 to 60 percent of your AGI. Also, you must claim the deductions in the year that the contributions were made.
There are exceptions in which the IRS allows you to carry over contributions that exceed your AGI for a particular year and claim them in a subsequent year. See the subsection section entitled, Carryovers, under How to Figure Your Deduction When Limits Apply, in IRS Publication 526 for more information.
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) is designed to encourage charitable contributions in 2021. The CARES Act increases the AGI charitable contribution limit from 60 percent to 100 percent for 2021. In other words, you can get a volunteer coaching deduction for the full amount of your adjusted gross income.
Claiming Charitable Expenses
You can mostly claim charitable expenses if you itemize your deductions rather than take the standard deduction. The standard deduction is rising to $12,550 in 2021 for single people and $25,100 for married couples filing jointly. Also, heads of households can claim deductions up to $18,800.
Therefore, some people may simply take that rather than summing up and documenting their charitable expenses.
However, the exception to the rule is the $300 deduction single filers can get for cash contributions to qualifying charities even when they claim standard deductions. Married couples filing jointly can claim double that.
- IRS.Gov: Exemption Requirements - 501(c)(3) Organizations
- IRS.Gov: Tax Exempt Organization Search
- IRS.Gov: Publication 526 Cat. No. 15050A Charitable Contributions
- IRS.Gov: The IRS Encourages Taxpayers to Consider Charitable Contributions
- IRS.Gov: IRS provides tax inflation adjustments for tax year 2021
Tara Thomas is a Los Angeles-based writer and avid world traveler. Her articles appear in various online publications, including Sapling, PocketSense, Zacks, Livestrong, Modern Mom and SF Gate. Thomas has a Bachelor of Science in marine biology from California State University, Long Beach and spent 10 years as a mortgage consultant.