Financial Articles

A taxpayer may usually deduct 14 cents per mile for all miles driven on behalf of a charity (Section 170(i)). The primary purpose of the travel must be to contribute to the mission of the charity. In addition, the travel must not provide the taxpayer with any significant amount of personal pleasure, recreation, or vacation (Section 170(j)). Further, a taxpayer may not deduct the miles driven on behalf of a charity, other than a church, if the purpose of the travel is to influence legislation (Section 170(f)(6)).

For example, if a taxpayer drove her personal automobile a total of 500 miles to procure and distribute wheelchairs on behalf of a qualified charitable organization such as LifeNets http://www.lifenets.org/, the taxpayer could deduct $70.00 (500 miles x 14 cents per mile). However, if a scoutmaster took a troop of Boy Scouts to summer camp and spent a week there with them, the scoutmaster may not deduct the miles because the trip to the summer camp has a significant element of personal pleasure, recreation, or vacation.

For miles for miles driven for relief efforts related to Hurricane Katrina after August 25, 2005, through December 31, 2006, a taxpayer may deduct 70 percent of the standard mileage rate in effect for business miles. If a taxpayer receives a reimbursement from a charity for miles driven for relief efforts related to Hurricane Katrina after August 25, 2005, through December 31, 2006, the taxpayer may exclude the reimbursement from gross income up to 100 percent of the standard mileage rate for business miles.

The standard mileage rate for business miles was 40.5 cents per mile from August 25, 2005, through August 31, 2005. The standard mileage rate for business miles increased to 48.5 cents per mile from September 1, 2005, through December 31, 2005. The standard mileage rate for business miles driven in 2006 is 44.5 cents per mile (Rev. Proc. 2005-78).

If a taxpayer does not receive any reimbursement from a charity for miles driven for relief efforts related to Hurricane Katrina, the taxpayer may deduct 29 cents per mile for miles driven from August 25, 2005, through August 31, 2005; 34 cents per mile for miles driven from September 1, 2005, through December 31, 2005; and 32 cents per mile for miles driven in 2006 (Rev. Proc. 2005-78).

If a taxpayer receives reimbursement from a charity for miles driven for relief efforts related to Hurricane Katrina, the taxpayer may exclude from gross income up to 40.5 cents per mile for miles driven from August 25, 2005, through August 31, 2005; 48.5 cents per mile for miles driven from September 1, 2005, through December 31, 2005; and 44.5 cents per mile for miles driven in 2006 (Rev. Proc. 2005-78).

In addition to the standard mileage rate, a taxpayer may deduct the cost of parking fees and tolls incurred while driving an automobile on behalf of a qualified charitable organization (Rev. Proc. 2005-78).

If a taxpayer has any doubt about the status of an organization as a qualified charity, the taxpayer may consult IRS Publication 78 at the IRS Web site: http://www.irs.gov/

A taxpayer claims the deduction for miles driven on behalf of a charity on Schedule A of Form 1040. The deduction for miles driven on behalf of a charity is included with the amounts for cash contributions on the same line of Schedule A of Form 1040.

A taxpayer should have good records such as a mileage log to document the deduction. The burden of proof is on the taxpayer to prove the amount of all deductions claimed.

If the taxpayer’s total itemized deductions do not exceed the standard deduction amount, the taxpayer will usually not receive any benefit from the deduction for miles driven on behalf of a charity.

Alan D. Campbell is a CPA in Arkansas and Florida and is self-employed primarily as an author of tax publications. He earned a Ph.D. in accounting with an emphasis in taxation from the University of North Texas. He is also admitted to practice before the United States Tax Court. He has published numerous articles on tax topics in professional journals. He is the co-author of the book Tax Strategies for the Self-Employed and the revision editor of CCH Financial and Estate Planning Guide, 15th edition. For more tax savings strategies, please see his blog: http://taxsavingsstrategies.blogspot.com

Everyone wants to save money, but no one wants to change his or her lifestyle to do so. Many people think that the only way to save is to go without; Give up eating out at restaurants, stop going to the movies, stop shopping, etc. This is not the case! It is very simple to still enjoy going out, as well as save money. You just have to find ways to spend less while going out. Here are some examples:

When going to a restaurant:

· Always use coupons! I can’t stress that enough. There are many ways to find them. The Sunday paper usually has coupons for a few restaurants. Many restaurants send out coupons in the mail hoping to get you to visit them. The Entertainment Book has coupons for many restaurants. The restaurant’s own website might have a coupon that you can print out and bring in. Sometimes you will find coupons in their take-out menu. You will be able to save a few dollars just for taking a few seconds to look for a coupon.

· Share a meal. If you’re going out to dinner, many times you can get away with ordering one main course and an appetizer or salad and sharing them with your partner since the portions are so large. By splitting them, you will save a lot more then if you had each gotten your own meal, plus you will get more of a selection since you’ll get to taste both an appetizer and an entrée.

When wanting to see a movie:

· If you want to go to the movies, consider going during the day, or in the early evening. These are all considered matinee showings, and you will usually pay about half of the price you would pay at night! It doesn’t sound like that big of a savings, but if you go to the movies just once a month, you can save $54 a year per person. You’ll save even more if you go more often!

· If you want to save even more money, you can rent the movie once it goes to DVD. Many websites will allow you to buy packs of 10 DVD rentals, and you will end up saving anywhere from $0.50-$1.50 per rental! This can really add up. If you rent one movie per week, you can save up to $78 a year! Also keep an eye out for coupons that allow you to rent one and get the second free.

There are many other simple things you can do to save money when going out to enjoy different forms of entertainment. For other tips like the ones you just read, see the website below.