If you donate money to your church or another tax-exempt organization, you are allowed to deduct those cash donations from your taxable income. The same is true for non-cash donations like used items donated to Goodwill. But did you also know that you can deduct expenses incurred from volunteer work or other charitable activities? Thanks again, IRS!
Let's say you mentor a kid across town as part of the Big Brothers, Big Sisters program. You drive 20 miles (32 kilometers) every week to meet him at his apartment. You buy reading and math workbooks to complete together. Every month, you take him to the museum or the zoo or a children's music concert. You have kids of your own, and sometimes you pay a baby sitter to watch your own children while you mentor.
All of these out-of-pocket expenses support a volunteer activity with a tax-exempt charitable organization. So all of these expenses are deductible, including:
- Mileage to and from the mentoring appointments
- Books and other tutoring materials
- Tickets to museums, zoos and educational events
- Childcare expenses while you volunteer [source: Williams Accounting & Consulting].
Don't let your charitable nature cheat you out of well-deserved tax deductions. If you really want to get creative, you can even deduct the expenses of the flour and sugar you buy to make cookies for the school or church bake sale fundraiser.
Next, we'll look at the creative (but dangerous) world of home office deductions.