Sample Annual Year-End Letter to Volunteers Related to Deducting Out-of-Pocket Costs

DATE

 

[Mr. David Jones
567 Tree Lane
Orlando, Florida  32801]

Dear [Mr. Jones]:

Thank you so much for the volunteer services you provided to our ministry during the year [20XX].  Your efforts in serving as a (describe volunteer position) have contributed greatly to the accomplishment of our mission.

While federal tax law does not permit volunteers to deduct the value of their personal services as charitable contributions, volunteers are permitted to deduct out-of-pocket costs they incur in providing such services. For example, if you purchased and donated materials in connection with your volunteer services, your out-of-pocket costs for the materials may be deductible. Other examples include your out-of-pocket costs for travel, lodging, etc., in connection with providing the services. Federal law also permits volunteers who use their vehicles in providing services to ministries to deduct their mileage costs at a rate determined by federal law. Of course, the costs described in this paragraph are deductible only if the volunteers are not reimbursed for them. 

To deduct unreimbursed out-of-pocket costs, you must have proper documentation to support the amounts deducted. You may find IRS Publication 526, “Charitable Contributions” helpful in this regard.  We have enclosed a copy of the (year) edition of Publication 526 for your convenience. You should consult your tax advisor to determine the amount, if any, that you may actually deduct on your own return.

This letter will serve to confirm that we provided you with no goods or services in exchange for your contributions of the services described herein, or the related unreimbursed out-of-pocket costs you may have incurred.

Thank you again for your generous service.

Sincerely,

John R. Post
President


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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