Last week, Hurricane Sandy passed through the northeast, ravaging towns, homes and shorelines. The cleanup process in the damaged areas has already begun, but there is much work to do. There has been an amazing response to the disaster and many people are donating money, clothing, food and supplies as well as volunteering to cook for people living in the shelters, helping to gut and clear homes that were damaged by the storm, delivering supplies, cleaning up neighborhoods, sorting donations and more.
If you have or are planning to donate money or clothing/food to a charity or if you want to volunteer, here are some tax tips to keep in mind:
1. Remember that you can’t get a tax deduction for the time spent volunteering (i.e. if you volunteer for eight hours, there is no hourly rate that you can claim as a deduction). HOWEVER,
2. You can deduct your expenses for transportation to and from the volunteer site, including travel costs and lodging. Examples could be deduction for cost of metro card or mileage for driving (at 14 cents a mile).
3. You can also claim meals the day of volunteering as well as special clothing you might have purchased in order to volunteer. In the damaged areas in NY and NJ, many volunteers are asked to bring their own shovels, work gloves, masks and other special clothes and equipment needed for cleanup; the cost of those items will likely be deductible so hold on to those receipts, as well as the receipt for the Subway meal you picked up for lunch.
4. If your expenses exceed $250, you must get a receipt from the charity indicating what was done and what will be claimed.
5. To claim a deduction based on making a cash donation, you are allowed to deduct the total amount up to 50 % of your annual gross income (AGI). Make sure that when you are donating cash to charity that you verify the charitable organization. You can check out whether a charity is legit by visiting www.give.org.
6. If you are donating clothing, blankets, shoes, supplies, etc. to a charity, you can claim the current market value of the items you donated. Make sure to get a receipt from the charity and list the items and the approximate dollar value for your records.
7. In addition, in the wake of Hurricane Sandy, the IRS and Treasury Department have just released a special relief program for volunteers. Employees may donate their paid leave (ie. sick days, personal days and vacation) to a qualified charitable organization in exchange for an employer cash donation. If the employer chooses to adopt such a program, the value of the cash donation or gift will not be counted as gross income and therefore not taxable to the employee. However, the employee will not be able to claim a tax deduction. Similar emergency provisions were made after Hurricane Katrina and the 9/11 attacks. For more information, refer to IRS Notice 2012-69.
This post is for informational purposes only. The information herein should not be relied on for financial, legal or tax advice. Please consult with a tax planning professional for further information.