Volunteer Tax Deductions

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Are expenses incurred for volunteer work deductible? Consider if a person is planning a church mission trip to El Salvador to help build houses, and the church will not cover the airfare. The volunteer may deduct his or her properly documented travel expenses and possibly other expenses as well. Similarly, if a person serves as a volunteer board member, his or her unreimbursed travel expenses to attend meetings and other functions may be deductible. Several IRS guidelines apply for taxpayers who file an itemized Schedule A with their IRS Form 1040.

First, only expenses that are directly related to qualified volunteer services may be deducted. Examples of related expenses include transportation, lodging, and meals. As long as items such as food, books, building materials, or other tangible items are purchased for the charity, these expenses will generally be deductible.

Second, volunteers may not deduct the value of their services. Thus, if a person spends 40 hours laying bricks in El Salvador, he or she may not deduct the hourly wage of the average bricklayer. However, the person may deduct the costs of supplies brought and used on behalf of the charity.

Third, the expenses must be unreimbursed, be reasonable, and not consist of personal expenses.

Fourth, the charity rate for vehicle mileage is 14¢ per mile. This is significantly lower than the business rate.

Fifth, no out-of-pocket expenses are deductible if there is a significant element of personal pleasure associated with them. Not even partial deductions are permitted. This element is assumed “significant” if the importance and/or duration of the duties to the charity are minor in relation to an entire trip or other service activity. This does not mean that volunteers may not enjoy their work. For example, a day at the beach after a grueling, labor-intensive mission trip should be deductible. But if meetings are only one hour per day, the deductibility of these expenses is questionable.

Lastly, as with other tax deductions, volunteers must maintain reliable records to satisfy applicable substantiation requirements, including pertinent dates, amounts, receipts, and descriptions of the charitable purpose of out-of-pocket expenses. For unreimbursed expenses of more than $250, a volunteer also must obtain a written acknowledgment from a donee organization with a description of the expenses incurred on behalf of the organization, a statement of whether the donee provided any goods or services in return, and a good faith estimate of any such goods or services provided in return other than intangible religious benefits.