Use your vacation to do something good -- and get a tax write-off

The tragic Gulf oil spill is inspiring people to use their vacation time for good. I applaud these incredibly dedicated people who take the time off work, often traveling long distances, to help those who are in need. Even better, WalletPop.com has an article reminding us that these charitable individuals may be eligible for a tax deduction.

Of course, time volunteered is never deductible, travel and out-of-pocket expenses are. According to the article, to qualify for the deduction, your expenses must be:

1. not otherwise reimbursed;
2. directly connected with the services you're performing;
3. expenses you had only because of the services you performed; and
4. not personal, living, or family expenses.

If your summer vacation finds you helping to clean up wildlife in the Gulf, keep track of your travel expenses, this includes gas and maintenance of your vehicle, any parking fees or tolls you pay if you are within driving distance. You are allowed to claim reasonable travel expenses including air or bus fare, reasonable hotel and meal expenses, and taxi rides for getting to and from the volunteering site.

Remember, you’ll have to itemize your deductions to claim these valuable tax breaks, so make sure you understand your own tax situation to make sure you’ll be eligible.

Of course the main reason to get involved in the cleanup is to help others. But that doesn’t mean you can’t enjoy the tax breaks your generosity gives you.

Read the entire article here.

IRS to Reduce Mileage Deduction for 2010: Will You Owe More?

From WalletPop.com:

The IRS made an announcement this month that is a matter of pennies but could significantly affect some taxpayers' 2010 amount owed; by reducing the allowance for mileage deductions.

Claiming the mileage traveled for business is, after all, one of the favorite ways to rack up deductions, which you must declare on Schedules A and Form 2106 or 2106-EZ. For outside salespeople, pizza delivery people, and others who spend a lot of time on the road for work, it's huge, and it adds up fast; with 2009 rates at 55 cents per mile for business travel (anything done for pay -- going on appointments, taking your boss to the airport, going to the post office, etc. -- except your commute) an average employee who drove 10,000 miles for work could save $1,000 in taxes. The deduction rates for driving for medical purposes or moving, at 24 cents a mile, weren't shabby, either, and meant that many taxpayers could make a big reduction in their taxes owed simply by writing down mileage.

But for 2010, the standard rates will fall considerably, down to 50 cents for business miles and 16.5 cents for medical miles or moving, affecting that sample average taxpayer by more than $200 in taxes owed at the end of the year. For serious road warriors, it could be a huge impact, increasing taxes owed by more than a thousand dollars.

The IRS didn't explain why it made such a relatively big change in medical and moving mile rates; down from 24 cents to 16.5 cents, a 33% decline, compared to a 9% decrease for business miles. For the taxpayer who moves across country for work in 2010, it will mean a difference of $200 or thereabouts in gross income; not an enormous difference in taxes owed. This leaves me to wonder how much this rate affects the IRS' revenues, and why the agency decided to make such a big change to what seems a far less important deduction for the average American worker.