We have a lot of groups going on mission trips around the world. I have always felt that the airfare should be a tax-deductible expense.
As a CPA, would you agree?
This depends on what side of the picture we are looking at. If we are having the volunteers pay for their own airfare in order to reach the mission destination, we have one situation. In another situation we have the organization paying for the expense to get the volunteers down there.
In the first case, where the volunteer pays their own way, the volunteer can recognize itemized deductions for the expense of their travel, as long as it is only for volunteer purposes, and not a veiled vacation. There are certain limits to these deductions, see: http://www.nolo.com/legal-encyclopedia/remind-nonprofit-volunteers-tax-deductions-29659.html . This link might be a helpful resource of initial information for any non-profit working in this manner. Also, here is a much more in depth, though brief, overview of the crux of the matter when it comes down to when a volunteer can deduct travel expense for charitable purposes: http://www.wkpz.com/content/files/Making%20Your%20Mission%20Trips%20Deductible.pdf .
In the second case, where the non-profit is paying the travel expense, things are a bit different. Because it is a non-profit, it doesn’t care much about the deduction (unless dealing with unrelated business income). What it does need to ensure is that either it is paying directly for all expenses, or if not, that all expenses prepaid to volunteers are substantiated. If they prepay for expenses (per-diem) and the expenses are not substantiated, the remainder should be called income to the volunteer. This is where the foreign earned income deduction can come into play, but that is another story all together.
Rockwell R. Carr CPA
Office Email. CarrCPAS@gmail.com
Office phone. 505.891.2277
Any US tax advice contained in the body of this article was not intended or written to be used, and cannot be used, by the reader for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.
Always consult with a tax professional, or other appropriate professional, about your specific situation before making any final decisions.