During the summer, a lot of taxpayers will travel not only for vacation, but also so that they can participate in a charity service trip. These trips help not only someone in need, but they can also help you lower your taxes each year. For those of you who do travel for a charity, or for those of you thinking about it, there are a few things you should keep in mind before you book that plane ticket.
For you to be able to deduct the cost of the trip on your taxes, you must first be volunteering for a qualified charity. Most charities must apply to the IRS to become certified, but churches and governments are generally qualified and do not have to apply. You should ask your charity what it’s status is before you choose to donate or participate in a service trip. You can also use the Select Check tool on the IRS’ website to check a group’s status. If you find your charity is qualified, then you will be able to deduct some of your travel expenses from your taxes.
To be able to deduct your expenses for participating in a charity, the work you are involved in has to be real and substantial throughout the trip. You cannot deduct expenses if the duties you are performing are nominal. You also can’t deduct if you do not have duties for a significant part of the trip. For instance, you can’t deduct travel for a week-long trip if you are only providing services for two days.
Now before you deduct every expense you incur, you should know the guidelines when it comes to which expenses are deductible and which aren’t. For instance, all costs you incur including the travel must be unreimbursed. You can’t deduct an expense if the charity itself has already reimbursed you for that expense. Also, all the out-of-pocket expenses must be directly connected with the services you are providing. You can’t deduct the souvenirs you bought or anything that wasn’t connected to the services you were providing on behalf of the charity. You cannot deduct any costs that are personal living or family expenses. All deductions you make must be directly tied to the service or the expenses that were needed to make you able to participate in the service. You also can’t deduct the value of your time, even if you lose income due to serving the charity.
Despite not being able to deduct your actual time spent on the trip, there are several things that you can deduct that can help unload the cost of volunteering. For instance, you can deduct your air, rail, and bus transportation. Any car or lodging expenses you incur can be deducted as well as any money you paid for taxis or transportation to and from the airport. You can also deduct the money you spent on meals and food.
To find more information about what the IRS will allow and won’t allow, you can visit their website or look at Publications 526 Charitable Contributions. If you’re unsure of how to deduct your expenses from a charity trip, or aren’t sure what deductions would work best for you give us a call here at Polston Tax. Our team of tax preparers and accountants can take a look at your finances and help you find the best deductions for your life. Give us a call at 844-841-9857 or schedule a free consultation online.