Cat Lady Beats IRS

June 14, 2011

In a recent Tax Court case, Jan Elizabeth Van Dusen v. Commissioner,136 T.C. No. 25, the court allowed a volunteer’s “unreimbursed expenses” incurred while taking care of stray cats in the taxpayer’s home for a 501(c)(3) charity. The deductions included expenses for food, veterinarian bills, kitty litter, a portion of the utility bills and other items.

This case clarifies the rules for anyone deducting unreimbursed charitable expenses of $250 or more if they involve the use of a home in carrying out the mission of a recognized charity. Whether this case will have application to other situations where volunteers use their home for fundraising events or other charitable purposes that further a charitable organization’s mission remains to be seen.

It is important to remember that the taxpayer must have a letter from the charity that details the amount of the donation and affirms that no goods or services were provided to the individual in connection with this gift in order for charitable gifts of $250 and above to qualify for a deduction. The letter from the charity must be signed, dated and filed with the donor’s return acknowledging the volunteer work and the expenses of the $250 or more.

McGuireWoods LLP Nonprofit & Tax-Exempt Organizations Group

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