If you donate your services to charity and travel for that cause, you may be able to deduct some expenses but not all. While you can’t deduct the value of the services that you provide to the charity, you may be able to deduct some of the out-of-pocket travel costs you incur while working on behalf of that charity…with some very important caveats.
Most importantly, in order for your travel expenses to be deductible, your volunteer work must be performed for a qualified charity. Most groups, other than churches and governments, must apply to the IRS to be recognized as a qualified charity. You’ll want to check with your Untracht Early professional to make sure the organizations with which you’re involved are eligible to receive tax-deductible charitable contributions to be sure yours qualifies.
Of course, not all types of travel expenses qualify for a tax deduction. For example, you can’t deduct your costs if a significant part of the trip involves personal pleasure, recreation, or vacation. Additionally, you can’t deduct expenses if you only have nominal duties or don’t have any duties for significant parts of the trip. However, you can deduct your travel expenses if your work is substantial throughout the trip.
Deductible travel expenses must be: (a) unreimbursed, (b) directly connected with the services, (c) expenses you had only because of the services you donated, and (d) not personal, living, or family expenses. These travel expenses may include air, rail, and bus transportation; car expenses; lodging costs; meal costs; and taxi or other transportation costs between the airport or station and your hotel. You can pay the travel expenses directly or indirectly. (You make a payment to the charitable organization and the organization pays for your travel expenses.) A good rule of thumb to go by is that expenses you incur for a charitable purpose, but which primarily benefit you as a taxpayer, are not deductible as charitable contributions.
If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. You can’t deduct personal expense for sightseeing, entertainment, and other expenses for your spouse or children. The cost of child care while performing services for a charity, for example, isn’t deductible, even if you can’t participate in the volunteer work without incurring this expense.
However, if you’re using an automobile for charitable purposes, you can deduct the cost as a charitable contribution at the rate of $.14 per mile, as well as the cost of gas, oil, parking, and tolls insofar as they’re directly related to the use of the vehicle for volunteer services to the charity (though general expenses such as vehicle registration and monthly lease payments are generally not permissible as a deduction).
It’s important to note that, if you’re intending to claim out-of-pocket expenses that total more than $250 for a single charitable activity, you’ll need to keep detailed records of those expenses and obtain a written receipt from the charity. The receipt will need to explicitly state both what the services you provided for the charity were and whether or not you received any goods and/or services from the charity for the services you rendered. However, the receipt need not show the dollar amount of actual out-of-pocket expenses (and anything under $250 need not be reported at all).
If the requirements are met, traveling while donating services to charity can be a win-win.
For additional information on traveling for a charity, contact your Untracht Early advisor.