Revenue Ruling 78-18: Deducting Charity Car Expenses

Revenue Ruling 78-18 clarifies how individuals can deduct the out-of-pocket expenses from using a personal vehicle for a charitable organization. It establishes that while the value of your time is not deductible, the actual costs incurred to provide those services can be. This allows volunteers to receive a tax benefit for expenses directly related to their charitable efforts, such as driving to deliver food for a food bank or transporting items for a nonprofit.

Qualifying for the Deduction

To claim a deduction for automobile expenses, the services must be rendered to a qualified charitable organization. These are generally entities designated as 501(c)(3) organizations by the IRS, which includes most religious, educational, and charitable groups. You can verify an organization’s status using the IRS’s online Tax Exempt Organization Search tool to ensure your contributions are eligible.

You can only deduct costs you incur while actively providing services to the charity. For instance, if you volunteer to deliver meals for a local church’s outreach program, the cost of driving your car from the church to the recipients’ homes is deductible. The travel must be for the primary benefit of the organization, not for personal purposes.

Calculating Deductible Automobile Expenses

Taxpayers have two methods for calculating the deductible amount of their vehicle expenses: the standard mileage rate or the actual expense method. The standard mileage rate is a simplified approach set by the IRS specifically for charitable activities. For 2024, the rate is 14 cents per mile driven in service of a charitable organization.

Alternatively, you can use the actual expense method, which involves tracking specific costs. Under Revenue Ruling 78-18, only the costs of gas and oil that are directly attributable to the charitable driving are deductible. The ruling explicitly disallows deductions for several other common vehicle costs, including:

• General repairs
• Routine maintenance
• Tires
• Depreciation on the vehicle
• Insurance premiums

The standard mileage rate offers simplicity, while the actual expense method may yield a larger deduction for those with high gas and oil costs, though it requires more detailed records. This method is more restrictive in the types of costs allowed. Taxpayers cannot switch between methods for the same vehicle within the same tax year.

Recordkeeping and Reporting Requirements

Proper documentation is necessary to substantiate these deductions. If using the standard mileage rate, you must maintain a contemporaneous log of your driving. This log should include:

• The date of each trip
• The name of the charitable organization
• The specific purpose of the travel
• The starting and ending odometer readings for each trip

For those using the actual expense method, meticulous records are also required. You must keep all receipts for gas and oil purchases related to your volunteer driving. It is advisable to note on the receipt the charitable purpose to distinguish it from personal use expenses.

These automobile expenses are claimed as a charitable contribution on Schedule A (Form 1040), Itemized Deductions. This means a taxpayer must itemize their deductions rather than taking the standard deduction to receive this tax benefit. If your total noncash contributions, including these car expenses, exceed $500 for the year, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.