tax breaks — June 19, 2020

Can Coronavirus Volunteers Like Nurses, Food Bank and Cash Donors Get Tax Breaks?

by Susannah McQuitty

graphic of volunteers' hands, clasped together

 

As everyone pulls together to combat the effects of the Coronavirus pandemic, many are wondering if there is any financial help for efforts made to lessen the impact.

What about your taxes? Is there any way to get a break based on the help you provided during the pandemic? Let’s look at a few ways people could get some tax relief for helping with COVID-19 aid.

Is there a tax break for donating to Coronavirus funds for first responders?

Yes, there are two ways to claim a tax break for COVID-19 aid. If you itemize your deductions, you can deduct the full amount of your qualifying donations (up to the AGI donation limits). Or if you take the standard deduction, you can now deduct up to $300 of qualifying donations as an above-the-line deduction. The CARES Act made this possible, which opens up the charitable giving deduction to the millions of people who normally don’t itemize.

Make sure your donations go to a qualified 501(c)(3) organization, or you won’t be able to deduct the money you contribute to Coronavirus relief.

Can food bank volunteers get tax breaks for Coronavirus work?

Unfortunately, no—you can’t deduct your volunteered time or the value of the services rendered. The IRS doesn’t have a deduction for gifts of service because they are so much harder to measure, unlike monetary donations or goods.

You can, however, get a deduction for cash donations or non-cash donations (food, equipment or supplies) if you itemize deductions; AGI limits apply. Sorry, standard deduction people—the $300 above-the-line deduction only counts for cash. If you plan to itemize, just make sure you’re donating to a qualified 501(c)(3) organization and keep documentation to prove where the donations went.

Can volunteers get tax deductions for related out-of-pocket expenses like gas, vehicle mileage, meals and supplies?

Yes, some out-of-pocket expenses that are necessary while you’re volunteering away from home, including travel expenses, can count toward a tax deduction if you itemize deductions. (If you take the standard deduction, out-of-pocket expenses can’t count toward the $300 above-the-line deduction.)

This goes for medical professionals who may be going out of their way to help with relief—if you’re performing services to help provide relief to a qualifying charitable organization, track any related expenses for a potential deduction when you file next year.

Make sure you only count expenses that the charity did not reimburse you for—tallying up expenses for your deduction that the charity covered would be considered “double-dipping” and isn’t allowed. Also, any travel can’t include a significant element of vacation, recreation or personal time. If you work several hours each morning and use the afternoons for sightseeing or visits with friends, you can’t take the charitable donation deduction for the travel expenses.

Can medical staff who travel to help with high-risk, high-population areas get tax breaks for COVID-19 volunteering?

When we say “volunteering” in this context, we specifically mean nurses and medical staff who travel to different areas—sometimes even different states—to provide aid. These people are still working for income, but they are referred to as “volunteers” because they are willing to relocate temporarily to provide their services.

To date, no tax breaks have been announced for medical workers who travel to help heavily populated areas. You will likely have to pay state taxes for income earned while working in different states.

You might, however, be able to deduct certain expenses if you’re hired as an independent contractor instead of as an employee—you can read more about operating as an independently contracted nurse on our taxes for nurses blog post.

In addition to the usual work-related expenses of medical professionals, independent contractors may also be able to deduct travel, lodging and meal expenses that are necessary while you are performing services away from home.

Stay tuned—the HEROES Act has not been confirmed yet, but as it stands, there may be hazard pay involved for medical workers. The bill is still subject to adjustments, so nothing is set in stone, but extra pay for nurses and other medical practitioners may be coming soon.

We’ll keep you in the know

If you haven’t subscribed to the blog yet, be sure to opt in for updates on the Coronavirus pandemic and how it affects your taxes. You can read more on our COVID-19 hub and Tax Guide—stay safe and healthy!

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