The tax laws allow a deduction, as a charitable contribution, when a person performs services for a charitable organization. The allowed deduction is for out-of-pocket expenses only, not the value of your time donated.
Many churches, social services and universities are organizing groups to travel to New Orleans, Biloxi and other areas to help the victims of hurricane Katrina. The travel and living expenses incurred while volunteering are deductible. The expenses incurred in providing services are considered a cash donation to the charitable group.
There are several rules:
The services must be for a charitable organization such as the Red Cross, a church, a school or a group such as Catholic Charities, Lutheran Social Services, etc.
The contribution must be made through a third party like the above mentioned. If you go on your own and do work for individuals, your costs are not deductible.
Keep your receipts.
If the amount is over $250, you must have a statement from the charitable organization.
Provide the charitable organization with a statement of your out-of pocket expenses, along with copies of your receipts.
Receive a statement from the charitable organization stating your name, dates of services, area of service, and total expenses.
The expenses that are deductible include your miles, meals, lodging and fares for travel. You can also include the expenses you incur in the area while rendering your services. Examples include miles, rental car, meals and lodging.
If you donate non-cash items, such as food, equipment, clothes, bedding, etc., you may deduct the fair market value of these items, but no higher than what you paid. If others gave you things to take to the hurricane area, they should make a list of these items and their estimated value and have the list signed by an official of the related charitable organization from their home town. An official of an organization in the relief area could also sign the statement and mail it back to the donor. Gift cards for stores such as Wal-Mart or Home Depot can be considered a cash donation if they are given to a charitable organization.
If your service was in 2005 and you have already filed your 2005 return and had not taken the deduction you may amend the return, using form 1040X, you have three years.