In this spirit of holidays, many nonprofits will see a rise in the number of volunteers helping to fulfill their missions.  Nonprofits in Los Angeles are no exception.  For example, take Food on Foot, a 501c3 dedicated to providing the poor and homeless of Los Angeles with nutritious meals, clothing, and assistance in the transition to employment and life off the streets.  Its website lists that it is completely full with volunteers who will serve meals during the Thanksgiving weekend.   The community appreciates their generosity and Uncle Sam appreciates it too. The IRS recognizes this dedication with a tax break for out-of-pocket volunteer expenses.

Out-of-Pocket Volunteer Expenses

Any out-of-pocket expenses related to your volunteer activities on behalf of a nonprofit are deductible as charitable contributions. This includes expenses like: phone calls, photocopying/printing, postage, supplies, Internet/website fees, travel, and transportation.  It also includes meals and lodging, but only when away from home overnight and where the purpose is substantially related to volunteering (i.e., the personal element is minimal).   

Charity Miles 

Costs related to the use of your personal car while volunteering may be deducted either by taking the actual out-of-pocket expenses, such as gas and oil (but not the maintenance, depreciation or insurance) or the standard mileage deduction (14 cents per mile for 2009). Costs for parking and tolls may be deducted under either method.  

Do-Gooder Example

A dedicated volunteer - let's call her "Sally Do-Gooder" - is on her local Feed The Homeless planning committee to help feed thousands of people in the local stadium on Thanksgiving and Christmas day. Over several months, Sally drives to a -planning meetings once a week. She also uses her car when meeting with local businesses regarding sponsorship. She then drives her car to deliver brochures to local retailers and community organizations. She makes many trip back and forth to the stadium as well.  

While enjoying a foot massage after the holidays, Sally calculates her total mileage for all of these volunteer related activities as 876 miles and she has a total of $60 in parking fees. She also mailed brochures, spending $50 on postage. While reviewing her phone bills from the four-month period she was active on the planning committee, she estimates that 35% of her calls were related to planning the events. Over the same period, she estimates that she used her Internet and home email 40% of the time for planning activities. After several months of doing good, Sally had $328.64 in out-of-pocket volunteer expenses related to her volunteering that she can deduct as charitable contributions.  (Mileage at $122.64 (876 x $0.14 cents a mile)+ Parking at $60.00+ Postage at $ 50.00 + Mobile Phone at $56.00 (4 months x $40.00 x $0.35) + Internet at 40.00 (4 months x $25.00 x $0.40).

Record-keeping

To claim out-of-pocket and mileage expenses, you must keep good records - such as a journal or a mileage log - to prove or substantiate your deduction. If any single expense is more than $250, you must get a written receipt, with specific IRS language, from the organization to take this deduction. You don't have to include these receipts when you file your tax return. But you will be asked to provide them if you are audited, and even do-gooders get audited sometimes. (Note: You're generally required to keep these records for three years.)

For more info:  IRS Publication 526, Charitable Contributions