February 21, 2013

Travel for Mission Trip Deductible as Charitable Donation

Question:

A church regularly sends out teams on short term mission trips. They have set up a special fund for receiving special offerings and for reimbursing travel, meals and lodging expenses. Recently, a team was required to pay the hosting organization a fee for each member to cover meals and lodging. The team leader "required" each team member make a donation to the fund in the amount of the fee. Are these donations tax deductible?

Some argue that the team members are receiving a benefit from the donation and should not receive a tax benefit for the donations. Others feel they should because the "benefit" they receive doesn't seem to be in the same class with the IRS examples of tickets to sporting events, dinners, materials received from auctions, etc. Plus, cannot these expenses be deducted on the individual's Schedule A as out-of-pocket contributions if the church doesn't consider them a donation?

Answer:

Publication 526 says, "Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. This applies whether you pay the expenses directly or indirectly. You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses.

"The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses."

Churches and mission trip members will have to decide for themselves if they were "on duty" throughout the trip or if they were simply performing nominal/no duties for a significant part of the trip. However, it is likely in the above stated situation that the amounts paid represent tax-deductible contributions.

4 comments:

  1. Does this deduction also include out-of-pocket expenses paid to a pharmacy for malaria drugs required for the trip? It was paid direct to the pharmacy and not through the church.

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  2. While a quick check of Federal Tax Regulations and court cases revealed nothing directly about the out-of-pocket expense for malaria vaccination, Federal Tax Regulation section 1.170A-1(g) provides the following guidance:
    “Unreimbursed expenditures made incident to the rendition of services to an organization contributions to which are deductible may constitute a deductible contribution. For example, the cost of a uniform without general utility which is required to be worn in performing donated services is deductible.”
    Expenses which were incurred as a result of performing services to a charitable organization would appear to be deductible.

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  3. I know this post is a little old, but this is the first time we have been asked for something by someone that went on a mission trip. I know normally we would provide a contribution statement, but we can't really include the mission trip on that statement considering we are putting that they did not receive any goods or services for these gifts. That being the case is it best to just give them a letter that says they participated in the mission trip and how much they paid? It would then be their responsibility to figure out what is considered deductible and what is not? Thanks! Jesse

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    Replies
    1. The quid pro quo statement “that no goods or services were received in exchange for these donations” relates to services received of the nature of a personal benefit to the donor. Receiving “services” to facilitate travel for charitable endeavors are not considered personal in nature.
      Regardless, the individuals are permitted to deduct travel expense incurred for charitable purposes without processing their funds through a charitable organization. Nevertheless, the letter suggested in this comment maybe helpful to establish that the trip was for charitable purposes.

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