All this week I'll be answering last-minute tax questions as part of Marketplace Money's special report on tax season. The first one comes from Shaun from Burlington, Vermont:
I am a young professional in Burlington Vermont, working as an advocate for low-income individuals. About a year ago I decided to become involved in a non-profit organization that breeds and trains dogs for the visually impaired. I volunteered to take on a Labrador puppy, his name is Rawlins and have been training him to be a Seeing-Eye Dog.
The organization, Guiding Eyes For The Blind, covers veterinary bills, but I have been paying out-of-pocket for food, toys and the like and you'd be amazed at how fast a 40-pound bag of food disappears into a growing puppy!
I've religiously saved receipts for all such purchases and I'm curious if these can be tallied and considered a "charitable donation", since they added value to the non-profit organization through the pup I'm raising. If this is the case, what do I have to do to claim such contributions while filing my taxes?
ANSWER: Good luck with Rawlins - I have a one-year old black lab and know the challenges that can occur!
You may deduct out-of-pocket expenses when you serve a qualified organization as a volunteer. Without getting too technical, the qualified organization must be recognized as a 501(c)(3) (IRS jargon) organization. There is a high probability that this organization is qualified but a taxpayer may determine this by looking at IRS publication 78 which lists all the qualified organizations.
Certainly all the expenses you list appear eligible as a deduction. However, there is one more hurdle you need to overcome. Charitable contributions are deductible on Schedule A (itemized deductions) of Form 1040. If you do not itemize but rather take the standard deduction, you won't gain any benefit as a deduction. In any case, good luck with the training.
Frank Degen, EA is a self employed practitioner in Setauket (Long Island), New York. He has a Bachelors degree in mathematics from Iona College and a Masters degree from Johns Hopkins University. He became an Enrolled Agent in 1984. Degen, served a three-year term on the Internal Revenue Service Advisory Council (IRSAC) and was Chair in 2009.