Can I deduct the Time I Donated?

In recent years this has been a topic of much discussion due to the fact that many companies and organizations are cash-strapped and need to find new ways of attracting goods and services at minimal cost. If you are considering this type of deduction for planning in future periods or you have performed this type of service in the current tax filing period, here are some guidelines.

Value of Service:

The IRS specifically states that the value of your time and services are not considered a charitable contribution, however you can count the costs of materials used in the time you donated as a deduction. For example, if you are an Electrician and you volunteer your time to work on a special project for a Not-For-Profit group, your time in not allowed in the deduction but the materials are deductable.

Expenses incurred:

During the course of these donated services, there may be costs that are associated with the donation. The costs may include the mileage to go to the service site such as a church, hospital, or even an event gathering in the organization is sponsoring. The mileage rate is currently at $.14 for charitable deductions. You may also consider the value of the supplies and materials which are used in the course of this event. Please note that in situations such as this, it is a very good idea to retain the purchasing documents as back up for proof of the value. There are also some accounting rules that come into play here pertaining to the inventory valuation of the items withdrawn for charitable use.

Documentation:

The organizations included in the procurement and receipt of these services need to maintain accurate and detailed records in accordance with generally accepted accounting principal (GAAP) and IRS requirements for back up documentation. This receipt should include the name of the organization, date of the donation as well as the reported value.

Please review IRS Publications 8283, Publication 561, and Publication 334.

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