Several dentists have asked us about what deductions may be eligible for the volunteer dental work they do for the community. We looked at a few scenarios and have come up with some guidance.
A charitable deduction is not allowed for contributing services (time) for dentist (or anyone else) but they can deduct unreimbursed out-of pocket expenses that they incur when they render services to a (qualified) charitable organization.
Examples of deductible expenses include the cost of uniforms that are required to be worn while performing the donated services (clothing that is not suitable for everyday use), and supplies used in performing the donated services. Other examples include equipment, copying charges, office supplies, long distance charges, and postage.
A dentist can also deduct “reasonable” expenses meals and lodging while they are away from home. “Away from home” for purposes of charity is the same as “away from home” for business. In other words, the trip has to require the taxpayer to sleep or rest outside of their home in order to continue to do the charitable work. The cost of child care that someone incurs while providing the charitable services can’t be deducted even if the person can’t do the volunteer work without paying the child care expense.
The expenses have to be non-personal (i.e. no pleasure trips, entertainment costs etc.) and directly connected to performing the services for the charity. If they are primarily for the benefit of the taxpayer they are not deductible. The unreimbursed expenses are treated as being paid directly to the charity.
For auto expense a dentist can deduct 14 cents per charitable mile or actual expenses (gas and oil directly related to the use of your car for volunteer activities) but you can’t deduct general expenses such as depreciation, lease payments, license and registration or insurance. Parking and tolls directly related to the charitable work can be deducted whether you use the mileage or actual expense method.
Treat this advice as general guidelines and consult you CPA for specific guidance related to your particular situation.
Lance Jacob, EA, is a principal with the Dental CPAs, he can be contacted by emailing firstname.lastname@example.org or calling (410) 453-5500. The Dental CPAs have been providing accounting, tax planning, practice purchase assistance, bookkeeping, practice management services and other advice to the dental community for over 50 years.
For more information on all our services, contact our Dental CPA team at (800) 772-1065 or email@example.com