From baking powder to babysitting, there are plenty of out-of-pocket expenses for charities that may qualify for a tax savings come April. Yes, possibly even buying those wonderful Thin Mints or Thanks-A-Lots.
“Many taxpayers miss out on their share of charity-related deductions, because they don’t pick up the little contributions they do throughout the year,” said Lloyd Grissinger, lead managing director at accounting firm CBIZ MHM. “We all get involved in organizations that ask for volunteer efforts and food drives that involve you spending money not as a donation but as supplies.”
“A lot of those $50 or $100 items could add up to a big deduction,” he said. “Get the tax benefit you are entitled to.”
For example, if you just bought a few boxes of Caramel deLites Girl Scout cookies but opted to have the treats sent to troops as part of the “Taste of Home” Program, a service project that sends Girl Scout Cookies to soldiers serving overseas, then you can take the tax deduction.
Additionally, when cookie buyers donate their boxes of cookies to another organization, like a food pantry or shelter, then they may then treat the purchase price of the donated cookies as a charitable contribution.
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In order to factor that into your deductions, keep a receipt of the donation, a note of the organization’s name and the date and fair market value of all non-cash goods, said Kathy Pickering, executive director of H&R Block’s Tax Institute.
For deductions of $250 or more, you must also have a written acknowledgment of the contribution that states you received nothing in exchange, she added.
That’s true for other non-cash donations, too, like stocking up at the supermarket for a food-collection truck or purchasing winter coats for a coat drive. In that case, the entire cost of a new coat is tax deductible, but if you are contributing gently worn coats or jackets and other clothing your kids outgrew, you can only deduct the thrift shop or fair market value, which is less than retail, Grissinger said.
The same goes for used books, toys and household goods.
Still, a couple of old coats or Kitchen-Aids could add up quickly. “If you give away five coats, you might get a $100 deduction,” Grissinger added.
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Bake sales count as well.
For example, if you made brownies or cupcakes for a charity fundraiser, you can deduct the cost of the ingredients you used to bake them, even if it’s just flour, sugar and eggs. Just save the grocery-store receipt — it helps to itemize the costs in case of an audit,advised Lisa Greene-Lewis, a CPA and tax expert at TurboTax.
Other out-of-pocket expenses, like driving, could also qualify if you volunteer for a charitable organization, like Meals on Wheels, or run a car pool for a youth group. In that case, you must keep a log when you are providing services for a charity or nonprofit so you can deduct charitable mileage at the federal rate of 14 cents per mile.
“A lot of those $50 or $100 items could add up to a big deduction. Get the tax benefit you are entitled to.”
-Lloyd Grissinger, lead managing director at accounting firm CBIZ MHM
However, there cannot be any significant element of personal pleasure, recreation or vacation involved, so the cost of an Uber to a fundraiser or gala, for example, would not qualify, Pickering added.
You might also be able to deduct the cost of a babysitter if you’re paying her to watch the kids while you volunteer.
The federal tax court has ruled that it’s OK to list the cost of a babysitter as a charitable contribution on your return, according to Greene-Lewis. But in that case, document the date and time and the organization’s name so there is a record of the volunteering and babysitting, she noted.
Just tread lightly, Grissinger cautioned.
“When you get into this type of deduction, it’s a little bit of a gray area,” he said.