Employers can improve employee morale, the work environment, and brand perception by fostering a volunteer-friendly culture.
Volunteer work is always valuable, but is it eligible for a federal tax deduction?
IRS Doesn’t Include Tax Deduction
The short answer is no, but that doesn’t mean all expenses related to volunteer work can’t be written off. These, according to the IRS, are not tax deductible:
- A volunteer’s time or services are worth something.
- The benefit of utilizing a volunteer’s space or resources
Tax deductions for volunteer expenses include:
- Unreimbursed travel expenses, such as lodging and food costs for overnight trips, as well as the actual cost of gas or oil used, or $0.14 per mile. Parking and toll fees can also be subtracted.
- Unreimbursed costs for purchasing and/or maintaining volunteer uniforms or clothing.
The IRS states that you cannot deduct costs for tires, registration fees, insurance, or vehicle repair/maintenance, even if these costs are incurred as a result of volunteer work.
The IRS is said to be unlikely to permit travel-related deductions unless there is no significant element of personal pleasure, recreation, or vacation in such travel. In other words, first-class travel and a stay at a five-star hotel might not be acceptable.
The IRS specifically states that volunteer clothing that can be used for non-volunteer purposes may not be eligible for a deduction.
It’s crucial to understand whether the charity you’re volunteering for satisfies the IRS’s criteria for charitable status. Churches publicly supported charities, and specific educational institutions are examples of qualified organizations, also known as 50% limit organizations.
According to the IRS, organizations can usually let you know if they fall under the 50% limit.
Qualified Organizations
Developing a volunteerism culture within your company can benefit both your firm’s operations and the wider world. Consumers who favor doing business with socially conscious organizations and employees who wish to change the world are drawn to employee-sponsored volunteerism.
- Recognized as a 501(c)(3) organization by the IRS or by a state or local government
- The IRS must receive an application on Form 1023 or Form 1024 from the majority of nonprofit organizations before it will recognize them as eligible tax-exempt entities.
The shared mission can strengthen workplace cultures and assist organizations in embracing corporate social responsibility, regardless of whether you concentrate on climate challenges, racial injustice, diversity and inclusion, poverty, or another issue. Visit the IRS’ Charity and Their Volunteers explanation for more information.
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