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No Good Deed Goes Untaxed: Part Two

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Sandy Botkin

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Sandy is a CPA, Tax Attorney, and former IRS trainer. He has authored many helpful books on the subject of taxes, including 7 Simple Ways to Legally Avoid Paying Taxes ( Click Here ), Lower Your Taxes: Big Time ( Click Here ), and Real Estate Tax Secrets of the Rich ( Click Here ).
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In Part One, I noted that you can deduct out of pocket expenses for charitable activities. I included some of these expenses, but here is a continuation of more items that can be overlooked but are deductible:

Home Entertainment

If you host a fund raiser or board meeting, you can deduct the entire cost of the catering expenses as a charitable deduction. Even better, the 50% limit on business meals doesn’t apply here. 

Fundraising Dinners

Normally, you can deduct the portion of the cost that exceeds the fair market value of a fundraising dinner. For example, let’s say you and your spouse attend a dinner that costs $100 a head. If the meal is valued at $35 a head, you can deduct $130 ( $200 cost -$70 value). Any amounts exceeding $75 should be backed up with a written documentation from the charitable organization. Also , political candidates are not charitable organizations for purposes of the deduction unless the fundraising is going to a charitable foundation unrelated to their political activity. In addition, if you provide food for the charity, such as cake for a bake sale, you can deduct the cost of ingredients.

Uniforms

A deduction is allowed for the cost of uniforms used while performing charitable services as long as the clothing isn’t suitable for everyday wear. Thus, if you become a boy scout or girl scout master, you can write off the cost of the uniforms.

Foreign Exchange Students

If you host a foreign exchange student in your home, you can deduct up to $50 per month for each month that the child attends high school. To qualify, the student must life in your home under a written agreement with a qualified charity. Also, the exchange student can’t be a relative.

Charitable Conventions

You may be able to deduct the cost of attending a convention on behalf of the charity– such as meals and lodging– if you are an official delegate to the convention. However, the convention must be the primary purpose of the trip. Also, the cost of any side trips to tourist attractions isn’t deductible. Sorry.

Final thought: Individually, these items may seem small in amount, but collectively, they add up. Keep the records that you would need at tax return time.


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Sandy Botkin

Sandy is a CPA, Tax Attorney, and former IRS trainer. He has authored many helpful books on the subject of taxes, including 7 Simple Ways to Legally Avoid Paying Taxes ( Click Here ), Lower Your Taxes: Big Time ( Click Here ), and Real Estate Tax Secrets of the Rich ( Click Here ).