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The tax deduction of expenses incurred during volunteer charitable work is examined extensively in tax preparation courses. An established principle is that no deduction is permitted for the value of a taxpayer's time devoted to charity. However, taxpayers have potential charitable tax deductions for their out-of-pocket expenditures related to volunteering.

The tax deduction for people spending their own money while conducting volunteer work still demands following the procedures in a tax preparation guide for charitable contributions. A Kentucky woman recently learned in tax court that the rules for acknowledgement by a charity apply to payments while volunteering.

A tax preparer study course reveals that taxpayer records for deductible charitable contributions must include written acknowledgment by the charity for the gift in some circumstances. Tax rules require possession of that acknowledgment for any gift exceeding $250.

Ms. Bradley was a volunteer coach for a tax-exempt cheerleading team. When transportation was required for the team to attend a competition, Ms. Bradley wrote a personal check for $660 to rent a bus. She was not reimbursed for the expenditure, so she deducted it on Schedule A of her tax return as a charitable contribution.

The IRS managed to flag the $660 deduction. Upon examination, the deduction was denied because Ms. Bradley did not have a written acknowledgement from the charitable organization about receiving the $660. Representing herself in tax court, Ms. Bradley presented the judge with a confirmation of the bus charter and a money order receipt. Nevertheless, the court denied a tax deduction for the expense Ms. Bradley paid because she lacked a written acknowledgement from the charitable organization as required by the tax statutes.

A paid tax preparer professional should therefore remind clients about the record keeping requirement for charitable donations. Whenever the amount exceeds $250, a written confirmation from the charity is essential. This is true even when the contribution occurs while volunteering. Therefore, administrators of the charitable organization might need reminding about the contribution with a request for the written acknowledgement.

Interestingly, the IRS noticed Ms. Bradley's deduction of only $660. So, even taxpayers with small amounts should receive cautionary advice from their tax preparation services about charitable acknowledgements.

This same tax case also provided some other guidance about tax preparer work regarding charitable contribution deductions. For example, the tax court recognized Ms. Bradley's expenditure based upon her receipts. Denial of the tax deduction was strictly because further records were required due to the amount. Therefore, amounts of less than $250 appear safe from IRS scrutiny when volunteers simply retain receipts showing their out-of-pocket expenditures. In addition. Ms. Bradley's deduction of charitable mileage was accepted based solely upon her spreadsheet indicating miles retrieved from an Internet search using MapQuest.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Fast Forward Academy is a leading publisher of education for tax preparation courses and tax professionals. Access to free questions for the tax preparation guide is available on their website.

By Sawyer Adams
Article Source: http://EzineArticles.com/?expert=Sawyer_Adams