Tax Deductions for Mileage in Service to Charitable Organizations

by Scott Shpak
You have options when choosing how to declare mileage deductions when volunteering.

Volunteering serves your community as well as your sense of well-being, and while financial gain is not in your list of motivations, the Internal Revenue Service recognizes your contributions by allowing you to claim some out-of-pocket expenses incurred in charitable service as legitimate deductions. Use of your personal vehicle to aid charitable organizations is one such circumstance.

Standard Mileage Rates

The IRS publishes optional standard mileage rates annually as guidelines for calculating reasonable allowances for mileage reimbursements. The IRS adjusts rates for business use annually to account for changes to fuel prices and costs of living, but the mileage rate for charitable organizations and their volunteers is set by Congress, and that rate has not changed since the Clinton presidency. That rate of 14 cents per mile is about one-quarter of the business rate, so if you do a lot of volunteer driving, it may not be the best way to approach deductions.

The Actual Expense Deduction Method

Since the IRS rates for charity use of your vehicle are unlikely to cover reasonable costs, using your actual expenses to operate your vehicle may be advisable. This requires tracking both total mileage for the year and also the mileage portion used when volunteering. Note that expenses allowed for mileage deductions include gas and oil that are not reimbursed to you. Other expenses, such as maintenance, the cost of tires, registration fees and insurance, cannot be deducted.

Other Expenses Related to Volunteer Travel

Regardless of which basic deduction calculation you use, parking fees and bridge and road tolls are deductible when incurred out-of-pocket as you drive for a charitable organization. When your travel takes you away from home overnight, amounts you pay for a hotel may be deductible. Reasonable meal expenses may be deductible, though these are subject to the 50 percent meals and entertainment limitations imposed by the IRS. Travel deductions away from home may not be allowed if there is an element of personal recreation or vacation involved. You must spend most of your time performing volunteer duties.

Reporting and Substantiation Requirements

Regardless of which method of mileage reimbursement you use, calculate your charity usage as a percentage of total vehicle mileage for the year. When using the actual expense method, allowable expenses must be supported with receipts in compliance with IRS record-keeping requirements. If your deduction amount is greater than $250, a letter of acknowledgement of your service from the charity, including your name and a description of your services, is required. The charity must also declare any goods or services returned to you in kind, and a good faith estimate of tangible value. The IRS may consider this reimbursement, affecting your deduction claim.

About the Author

As an operations and technical projects manager in the photofinishing industry, Scott Shpak is also an experienced audio engineer and musician, as well as Editor-in-chief, feature writer and photographer for Your Magazines Canada.

Photo Credits

  • Siri Stafford/Digital Vision/Getty Images