Hot off the presses are the new 2005 mileage rates, just released by the IRS. Business miles will be deductible at 40.5 cents per mile in 2005, a nice bump up from 37.5 cents in 2004. The mileage rate for medical and moving expenses will increase $.01 to $.15/mile, but the rate for charitable use will remain at $.14.
Isn't it incredible that gas prices for charitable use didn't increase at all last year?!?
2 comments:
Why is it that volunteering one's time and automobile for charitable activities is essentially penalized?
That's a great question. I can't explain why the IRS views the charitable use of a vehicle as somehow costing less than business use. For volunteering your time, though, they are being consistent with a principle that is pervasive in the tax law: You can only deduct what has been taxed previously.
If you volunteer your time, you were never paid for your work, and therefore, never taxed. If it helps, compare it to getting paid, then donating your check back to the charity. You would receive a deduction then, but would also have taxable income that would offset the deduction. This would leave you in a net zero situation, the same as the deduction the Service currently gives volunteers.
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