Please note: Ally Bank does not provide tax advice and offers this information only as a consumer service. You should consult the IRS or a professional tax advisor if you have questions about charitable giving deductions.
Most everyone knows that the checks you write to qualified charities can also be tax deductions. But fewer people probably are aware there can be other benefits to charitable giving — some of which can help you out financially and some that can't be measured in dollars and cents.
If you've retired or have some free time and would like to help a cause you believe in, volunteering not only provides a charity with an additional pair of hands (almost always badly needed), but it also can provide you additional deductions. The Internal Revenue Service (IRS) doesn't allow you to deduct for the value of your time or services, but as of 2011, you could deduct for certain costs related to volunteering.
The Monetary Advantages of Volunteering
IRS Publication 526, Charitable Contributions, lists the volunteering expenses that you may be able to claim on Schedule A of your tax return. These include the costs of gas and oil, "that are directly related to the getting to and from the place where you are a volunteer."
If you don't want to figure your actual costs, there is a per-mile deduction. Be sure to check the IRS website and Publication 526 for the latest figure, or consult your tax professional to make sure you're making the most of the tax advantages to which you're entitled.
You can also deduct travel expenses to a convention or other out-of-town location as long as you were performing services for the charity and "there is no significant element of personal pleasure, recreation, or vacation in the travel."
Other potential deductions include the cost of uniforms, if "the uniforms are not suitable for everyday use, and you must wear them when volunteering," the IRS says.
It's Not Always About the Money.
Claiming your deductions can help lower your tax burden, but volunteering also comes with other benefits.
A study led by Michael Norton, a Harvard Business School assistant professor, and Elizabeth Dunn, an assistant professor of psychology at the University of British Columbia in Vancouver, found there's truth to the old adage, "It's better to give then receive."
"Happier people give more and giving makes people happier, such that happiness and giving may operate in a positive feedback loop," the authors concluded.
And that kind of reward, any expert could tell you, is tax-free.
Ally Bank is a different kind of bank, with truly different products and services that just make sense. Our interest rates are consistently among the most competitive in the country. You can learn more at Allybank.com or by calling customer care at 877-247-ALLY (2559), where we're happy to answer your questions anytime, 24/7.