Giving to charity, whether it be giving money or giving time, is great for the soul. It can also be good for your tax return, albeit there are some conditions which must apply.
When Volunteering Can be a Tax Deduction
Typically, volunteering your time will not earn you a tax credit, however, if you volunteered as a firefighter, or search and rescue team member, you may be eligible to claim your hours of service.
If you volunteered in this capacity for at least 200 hours in the year, you can claim $3,000 for the Volunteer Firefighters’ Amount (VFA), or the Search and Rescue Volunteers’ Amount (SRVA), but you can’t claim both. If you volunteered as both a firefighter and a search and rescue team member, you can combine your hours for both activities and claim the total hours toward one of the credits.
Eligible volunteer firefighting services with a fire department include:
- responding to and being on call for firefighting and related emergency calls as a firefighter
- attending meetings held by the fire department
- participating in required training related to preventing or suppressing fires
Eligible search and rescue volunteer services with an eligible search and rescue organization include:
- responding to and being on call for search and rescue and related emergency calls as a search and rescue volunteer
- attending meetings held by the organization
- participating in required training related to search and rescue services
To be eligible, a search and rescue organization has to be a member of the Search and Rescue Volunteer Association of Canada, the Civil Air Search and Rescue Association, or the Canadian Coast Guard Auxiliary, or its status as a search and rescue organization has to be recognized by a provincial, municipal, or public authority. Not sure? Ask your search and rescue organization, and they can tell you if your volunteering is eligible.
As a volunteer firefighter or search and rescue volunteer, you may be eligible to claim a $1,000 exemption instead of the VFA or the SRVA.
You may have received a payment from an eligible employer, such as a government, a municipality, or another public authority for your work as a volunteer ambulance technician, a firefighter, a search and rescue volunteer, or other type of emergency worker.
The T4 slips issued by this authority will generally show only the taxable part of the payment in box 14 of your T4 slips, which is the part that is more than $1,000.
If you provided volunteer emergency services for more than one employer, you can claim the $1,000 exemption for each of your eligible employers.
If you are eligible for the $1,000 exemption and either the VFA or the SRVA, you must choose which one you would like to claim.
If you choose to claim the exemption, report only the amounts shown in box 14 of your T4 slips on line 101.
If the authority employed you (other than as a volunteer) for the same or similar duties or if you choose to claim the VFA or the SRVA, the full payment is taxable.
If you choose to claim this income exemption, you will not be eligible for the volunteer firefighters’ amount or the search and rescue volunteers’ amount.
Completing Your Tax Return
If you are using any version of TurboTax, then you do not have to worry at all about the technical information being asked of you because TurboTax will guide you though this process, ask you questions to determine which tax credit you are entitled to, and then apply that in the manner that makes the most sense for your unique financial situation.
If you are completing your own tax return, on paper, then you will need to follow this further step;
If you claim the $3,000 volunteer firefighters’ amount or the search and rescue volunteers’ amount, add the amounts shown in boxes 87 and 14 of your T4 slips and enter the result on line 101. Enter $3,000 on either line 362 or line 395 of Schedule 1.
If you are claiming the exemption, report only the amount shown in box 14 of your T4 slips on line 101.
The CRA might ask you to provide certification from the fire department or the search and rescue organization to confirm the number of hours of eligible volunteer firefighting or search and rescue volunteer services you performed.
Tax Deductions for Charitable Giving
Donations of money, household items, art or real estate made to a registered charity typically qualify for the charitable giving tax credit.
To claim the credit, the registered charity must give you a tax receipt for your gift, which will include the charity’s registration number and identifying information, the date, and the value of your gift. If you received an advantage for your donation, such as event tickets or dinner, the charity will deduct the amount of your advantage from the value shown on your receipt. Remember that only registered charities can give a charitable receipt, so make sure you verify their status with the CRA before donating.
If you made charitable donations through payroll deduction, you will need to have your T4 slip handy, as the donations will be reflected in box 46. After you have this information, work on your T1 return until you’ve figured your income on line 236; then complete Schedule 9 to calculate your charitable donation credit. Regardless of whether you file electronically or on paper, keep copies of your donation receipts and any T4 slips showing charitable donations for at least six years after you claim your credit.
Other tips for maximizing your charitable donations:
- Pool Your Donations with your Spouse: Because total donations of over $200 garner a bigger deduction, be strategic at tax time. If both you and your spouse have given, pool both your donations and assign the total to the spouse who will receive the larger benefit.
Software such as TurboTax Standard optimizes donations and allocates them to the taxpayer who would benefit the most.
- Carry Forward your Donation: Charitable donations do not need to be claimed in the year they were made, in fact, you can hold on to those donation receipts for up to five years and claim them all at once in a single tax year. If you are claiming a number of credits this year, check to see if your donation would be better claimed in a future year.
Donation credits are nonrefundable which means that if you are already in a position where you don’t owe any tax, you won’t benefit from claiming the credit.