Select from the categories below to read the related tax planning articles:

General Tax Planning

Business Clients

Investors

Retirement Plans

College Financing

Senior Concerns

Expenses incurred for Charitable Organizations

The general rule is that out-of-pocket costs incurred while performing services for a recognized charitable organization are deductible, except:

a. Travel expenses where there’s significant personal pleasure (See item 5 below) and,

b. Lobbying expenses

Examples of deductible expenses, and the tax law governing the deductibility of these provisions are as follows:

a. Automobile expenses (See 4 below) (Revenue Procedure 99-38)

b. Other transportation expenses (Revenue Ruling 58-240)

c. Costs of uniforms and accessories (Revenue Ruling 56-508)

d. Telephone expenses (direct costs only) (Louis, Francois TC Memo 1966-204)

e. Entertainment of others (other than you own food) (Louis, Francois TC Memo 1966-204

f. Conferences and training courses (Internal Revenue Service Letter Ruling 8242042).

g. Supplies (Revenue Ruling 56-508)

Examples of non-deductible expenses, and the tax law disallowing these provisions are as follows:

a. Babysitting expenses so that an individual can attend meetings and do other charitable work (Revenue Ruling 73-597)

b. Automobile expenses incurred in transporting your children to meetings (Kingsbury, John, TC Memo 1975-204)

c. Traveling expenses of other family members to conventions or other meetings where the other family members did not have an official role in the organization’s activities (Stevenson, Cecil TC Memo 1977-260).

Automobile expenses:

a. Must be supported by records that are made at or near the time of the expense.

b. To claim the standard charity mileage rate of 14 cents a mile, the following records must be maintained (Internal Revenue Service Publication 526):

1. The date the miles were incurred
2. The number of miles driven for charity purposes
3. The reason why the miles were driven

c. Additional records such as total miles driven and actual car-operating expenses for the entire year must be maintained if you claim the actual method of computing automobile expenses. For this reason, we do not recommend this method unless you incur substantial charitable mileage or are otherwise using the car for business.

d. In addition to the standard mileage rate, you may also claim parking fees and tolls incurred on behalf of the charity (Revenue Procedure 99-38).

Examples of “Significant and Not-Significant Personal Pleasure”

a. The Internal Revenue Service held that where a taxpayer sails from one Caribbean Island to another, and spends eight hours a day counting whales and other forms of marine life as part of a project sponsored by a charitable organization, he or she receives “significant personal pleasure” and therefore the expenses are not-deductible. (Notice 87-23)

b. The same notice held that where a member of a local chapter of a charitable organization traveled to New York City and spent an entire day attending the organization’s regional meeting, going to a play in the evening would be an example of “Not-Significant Personal Pleasure”.