The tax deduction for mission trip charitable travel isn’t as simple as it sounds. Churches have responsibilities, and also need to communicate the rules to participants. Here are 7 things to know about travel expenses:
- Trip participants who pay for travel expenses directly or to the church are eligible for a charitable contribution deduction.
- If the participant pays directly for expenses, then they must receive a receipt from the church to verify their participation in the trip.
- If the participant pays the church, then the church records the amount in the giving record account of the participant (for which a receipt will be provided).
- Expense deductions that qualify are transportation and reasonable expenses for lodging and meals.
- To qualify for a travel expense deduction, there must be no ‘significant element of pleasure’ in the trip. If a person participates marginally, or combines the mission trip with recreation or vacation, the travel deduction is invalid.
- The church must structure the trip to be ‘all business,’ and/or notify trip participants that a trip doesn’t qualify for a travel deduction due to the recreational activities.
- The church must maintain records that prove the validity of the charitable travel requirement. Examples of records include detailed itineraries of activities and times for charitable work vs. free time. Fundraising letters, photos, videos, and testimonies are other types of records that prove the purpose and success of the mission trip.
Salmon Sims Thomas specializes in accounting and consulting for churches and nonprofit organizations, so please check with us in advance of a trip if you need to clarify tax and/or compliance issues.