Volunteer vacations provide help, possible tax deduction
Sunday, March 25, 2018
Hundreds of students, and in some cases their families, recently took advantage of spring break to head to sunnier climes.
However, a couple of the usual beach destinations, Puerto Rico and the U.S. Virgin Islands, are still struggling with the aftermath of Hurricane Maria.
The good news is that some of the mainland spring breakers did or still are using their time off to participate in storm recovery efforts in Puerto Rico and USVI.
Kudos to these young people. Their commitment to social service bodes well for our future.
Despite the maturity, not to mention compassion, these students are showing by sacrificing their free time to help fellow Americans, most of them probably aren't worried yet about one of adulthood's most pressing tasks, taxes.
But one day, likely sooner than they want, they will have to deal with the Internal Revenue Service.
If by then they still want to travel to help other people and causes, they might be able to get a tax break for their good deeds.
Hitting the road to help others: Volunteer vacations let you help others within the United States as well as around the world. Some volunteer vacationers are part of post-disaster cleanup efforts. Others participate in ongoing programs, such as community building or teaching.
Being a part of such efforts might enable you to claim a tax deduction for your charitable trip.
In the case of voluntourism, the tax code model is a hybrid of the write-off for business travel and the standard volunteer tax breaks.
Here are three key things to keep in mind if you want Uncle Sam to help you head off to do good deeds.
1. Focus on the volunteer task.
Although you may be going to tropical island that, despite the hit it took in a hurricane, is still lovely and full of alluring beaches, the main reason for your trip and most of your time must be devoted to volunteer recovery efforts.
This is actually in the Internal Revenue Code, section 170(j):
"No deduction shall be allowed under this section for traveling expenses (including amounts expended for meals and lodging) while away from home, whether paid directly or by reimbursement, unless there is no significant element of personal pleasure, recreation, or vacation in such travel."
Don't cancel your reservations. Note the word "significant." That means yes, you can walk the shoreline during a break from building new homes for PR or USVI resident and certainly enjoy that respite. Just don't let such excursions become prevalent.
2. The cost of your services don't count.
Many expenses from your volunteer trip can count toward your tax deduction. Your time, however, is not one of them. You cannot write off the value of your services. If you are a carpenter and spend a week working at a storm-damaged school, you cannot claim the income you would have received if you’d done the same work for a commercial client.
3. You must itemize deductions.
As with all charitable deductions, you must itemize to claim them. Starting this tax year, fewer folks are expected to detail expenses on Schedule A since the standard deduction amounts have almost doubled. If you don't have enough volunteer trip costs along with other amounts you can itemize, you won't be able to claim your volunteer travel effort.
Go with a group: One of the best ways to ensure that your travel to help others will meet deduction demands is to go with an IRS-authorized nonprofit that's organized the type of volunteer work you want to do.
These groups typically prioritize and schedule the work needed in disaster areas. The also usually provide participants with letters containing details on their chosen project.
That type of documentation, along with all your related receipts, could help ensure you get the full tax break you’re allowed for your voluntourism good deeds.
New extended deadline for storm victims: A quick note here for the taxpayers who make the United States' island areas their homes. The IRS is giving you more time to file your 2017 tax returns.
The agency on March 22 reminded Hurricane Maria victims in the U.S. Virgin Islands and in the Commonwealth of Puerto Rico that the extended tax deadline for affected individuals and businesses is now June 29.
This applies to residents and business owners on all of three of the U.S. Virgin Islands (St. Croix, St. John and St. Thomas), as well as all 78 of Puerto Rico's municipalities.
This extension gives taxpayers more time to file their 2017 taxes and pay any taxes due on those returns. The relief also includes individual estimated tax payments, payroll and excise tax returns, corporate income tax returns originally due or on extension during the relief period and tax-exempt organizations required to file Form 990 series returns with an original deadline falling during this period.
And if you had extended the filing due date of your 2016 return until Oct. 16, 2017, that new deadline now is also the end of this coming June.
You also might find these items of interest:
- New tax law could cost charities $13 billion a year
- Check out the charitable donation tax deduction rules
- Don't fall for fake charities, which once again make the IRS Dirty Dozen tax scam list
Very interesting post! I think volunteer vacations can be super rewarding and fun - didn't know they were partly tax-deductible.
Posted by: Lisa | Sunday, March 25, 2018 at 04:06 PM