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Write off costs when doing good deeds for charity

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Although you can’t deduct the value of the services you provide on behalf of a charity, you can still claim tax write-offs relating to your activities.

Strategy: Keep track of out-of-pocket expenditures. When tax return time rolls around, you can generally deduct those costs that benefit the charity and don’t benefit you.

Here’s a rundown of several common examples.

√ Personal vehicles: If you use your own vehicle for charitable driving, you may deduct costs such as gas, oil and repairs that are attributable to those trips. In lieu of keeping track of all your actual expenses, you might choose to use a flat rate of 14 cents per mile for 2013, plus any charity-related parking fees and tolls.

√ Travel expenses: Similarly, air, rail, bus or taxicab fare incurred on behalf of charity is deductible. In addition, you can deduct the cost of meals and lodging on a charitable trip. The usual 50% deduction limit on meals does not apply. Caveat: There can’t be any significant element of personal pleasure, recreation or vacation in the travel.

√ Telephone expenses: Although you can’t deduct your basic telephone or cellphone expenses, write off long-distance calls made on behalf of a charity. Also, you may deduct the cost of a second phone line or fax in your home installed solely for charitable purposes.

√ Special clothing: If you’re required to wear special clothing while performing charitable duties—for example, a Boy Scout uniform or a Girl Scout uniform—you can deduct the cost of the clothing (assuming it is not suitable for everyday wear).

√ Entertainment expenses: If you throw a party or dinner for fundraising purposes, all your expenses are deductible. There’s no 50% limit on charitable entertainment and meal expenses.

√ Charitable events: When you attend events sponsored by a charity, your deduction is limited to the difference between the cost and the fair market value of the benefit received. For example, if a $40 meal at a fundraising dinner costs you $100, deduct $60. Obtain written documentation from the charity regarding the value of any benefits received.

√ Charitable conventions: You may deduct the costs associated with attending a convention on behalf of a charitable organization—including meals and lodging—only if you’re an official delegate. This includes meals and lodging at the convention site. Note: Any other personal expenses incurred while you’re away—such as golfing fees or admission to tourist attractions—are nondeductible.

√ Exchange students: If you host a foreign exchange student this year, you can deduct up to $50 per month of your expenses for each month the child attends school. The student must be living in your home under a written agreement with a qualified charity. Note: The student can’t be your relative.

Tip: The ‘‘pocket change” you spend on these activities can really add up. Maintain the records needed to support your deductions.

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