June 11, 2011; Source: Wall Street Journal | Volunteers who do work for charitable organizations and incur unreimbursed expenses may now be allowed to claim those as deductions on their tax returns, thanks to a ruling by the U.S. Tax Court and a woman who challenged the Internal Revenue Service.
Earlier this month, Jan Van Dusen learned that she could take a charitable deduction for money she spent caring for 70 stray cats in her home as a volunteer for Fix Our Ferals, a tax-exempt nonprofit. The Wall Street Journal reports that the Tax Court's decision "paves the way for volunteers of animal-rescue groups like the ASPCA and Humane Society of the U.S. to deduct unreimbursed expenses that further the groups' missions, such as fostering stray animals. It also clarifies rules for anybody deducting unreimbursed charitable expenses of $250 or more, especially if they involve use of a home."
Van Dusen, a 59-year-old former family law attorney living in Oakland, Calif. had tried to take deductions on her 2004 tax return for more than $12,000 she spent on food, veterinarian care, litter, and other items such as paper towels, garbage bags, and a portion of utility charges. She ran up these expenses as a volunteer for the rescue group, which captures and neuters stray cats, and then provides shelter until they can find a new home or be released.
After the IRS said those were nondeductible personal expenses, Van Dusen appealed and her case eventually made its way to Tax Court. In the run up to the ruling, she said IRS lawyers "tried to portray me as a crazy cat lady." The court ruled that because her expenses benefited a charitable group's mission, she could claim most as deductions. Some were disallowed, though, because she didn't have a letter or any other documentation from the charity acknowledging that she'd spent $250 or more on its behalf.
Among other groups, and their volunteers, that stand to gain from the court's decision is the Humane Society. Jonathan Lovvorn, the group's chief counsel, said it plans to "get the word out" about the ruling. According to the Wall Street Journal, The Humane Society estimates that many of its "tens of thousands of volunteers" shell out about "$2,000 of their own money a year to help animals in need, with some spending up to $15,000 a year when all expenses are counted."—Bruce Trachtenberg