Step 1: Genuine and Substantial Duty
If a significant part of the trip includes recreation or vacation, the trip's not considered to be charitable. The IRS doesn't specify what percentage of a trip is considered charitable, but you must have "real and substantial duties" throughout. If you can't prove as such, your charitable efforts are considered "nominal," and you won't be able to deduct expenses.
Step 2: Make Sure Your Charity is Qualified
Check with the IRS for this one. There are a lot of scammers out there, and you don't want to waste your time and effort on an organization with malicious intent. Use the Exempt Organizations Select Check on IRS's website to make absolutely sure your charity is eligible for tax-deductible charitable contributions.
Additionally, you cannot contribute to specific individuals, donor-advised funds, or property with a personal interest, and you cannot use an IRA to make a donation.
Step 3: Itemize!
Deductions do have to be expense-based: You can't deduct the value of your time or services that you give to charity. Unfortunately, that also includes primary streams of income lost while you volunteer. So you can't deduct any money you would've made from your regular job. But, you may be able to deduct some of your other costs, travel included.
According to the IRS, all deductible costs must be:
- Necessary, while you are away from home
- Directly connected with the services
- Expenses you only had because of the services you gave
- Not personal, living, or family expenses.
Make sure to keep the receipts for any expenses that fall into the above categories.
If you receive a daily allowance from a charitable organization while you volunteer, be sure to include any amount that exceeds your travel expenses when you file. You can only deduct for travel expenses if they exceed any allowances received while you volunteer.
Step 4: Deducting Travel
Deductions aren't just limited to the act of traveling. According to the IRS, these are the types of expenses you may be able to deduct:
- Air, rail and bus transportation
- Car expenses
- Lodging costs
- Cost of meals and
- Taxi or other transportation costs between the airport or station and your hotel.
Any more information needed on charity-related deductions can be found in the IRS Publication 526.
Charity is a wonderful thing, and we want to make absolutely sure that anyone who gives is rewarded and not punished when it comes time to file their taxes. Be sure to browse our services page and fill out the form for a free consultation. Or give us a call at 844-841-9857.