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25 Days of Giving: What the “No Smile” Rule Means for Your Taxes

The title of this sounds pretty lacking in the “merry and bright” department…especially considering this is the 25 Days of Giving series! But, the name here describes an little-known deduction beneficial for volunteers…and nonprofits to stress to volunteers to indeed encourage more volunteering!

The IRS does NOT allow a charitable deduction for volunteering your services. However, out-of-pocket expenses relating to volunteering are deductible. Yes, seriously!

Any given charity should provide volunteers with a description of the contributed services and state whether there has been any transfer from the charity of goods or services back to the donor. In addition to other out-of-pocket expenses, mileage is deductible at the IRS rate. Also, expenses like tolls and parking can be deductible.

For example, if a volunteer travels to attend a meeting or conference sponsored by the charity, then there is a deduction only if there is “no significant amount of personal pleasure” in the meeting. This has become known as the “no smile” rule. To be deductible, the principal purpose of the meeting must be to further charitable goals (aka operative mission). Which, if you think about it, is something worth smiling about!

2 girls "no smile rule"

Any questions as to what donors can and can’t deduct? If you’re a nonprofit organization you may have questions about the extent of information you’re required to provide. I welcome any questions on the topics. Gordon can be easily reached by phone at 515-371-6077; by email at gordon@gordonfischerlawfirm.com.

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