As part of their outreach efforts, many churches recruit missionaries to spread the gospel, educate and convert nonbelievers. Some volunteers travel short distances and for brief periods of time. Other missionaries make long-term commitments to their faith. Men and women undertaking these missions must abide by both the laws of the church and laws put forth by the Internal Revenue Service, which is why it’s wise to understand both scripture and accounting at tax time.
Defining a Mission
Internal Revenue Service publications 54, 517, 526 and 463 offer specifics related to tax-deductible missionary travel expenses, but in general, a missionary can claim relevant deductions as long as there is no “significant element of personal pleasure, recreation or vacation in the travel." Further, the IRS can require a missionary to prove that his status is actually “away from an actual home” in situations where a missionary serves abroad for years rather than months.
Donating cash to a church for the sole purpose of underwriting missionary travels can be a tax-deductible travel expense as long as the church has been designated a qualified charitable organization and the church controls all of the funds facilitating the travel expenses. For that reason, cash donations must be made to the church on behalf of the mission, not to an individual, as the IRS would likely consider the latter a gift.
Condition of Service
According to IRS Rul. 62-113, a missionary must not be paid for her time or work if her travel expenses are eligible for write-offs at the end of the year. To the extent that funds are used to pay out-of-pocket missionary expenses for travel, lodgings, meals and incidentals, these expenditures are most likely tax deductible as long as receipts are submitted to substantiate claims and the missionary does not collect a fee or salary for her efforts.
A missionary can claim travel expenses associated with transportation, including air, rail, bus, car and taxis. If a car is purchased for the use of missionaries while they are abroad, the church must own the auto and it can’t be used for personal travel. A missionary may be asked by the IRS to prove that an appreciable portion of the day on which travel expenses are claimed was spent fulfilling mission objectives. For that reason, a visit to Jerusalem’s Wailing Wall could be defined by the IRS as sightseeing, not missionary work.
Meals, Lodging and Extras
While the IRS allows business travelers to claim 50 percent of meal costs, this limitation may not apply to missionaries — as long as an expense log, receipts or credit card bills prove meals taken during travels are taken cannot be classified as extravagant or lavish. This applies to meals eaten in restaurants and prepared elsewhere, in which case, grocery receipts substitute for restaurant tabs. Prove your lodgings, laundry and other travel expenses were necessary to sustain you while accomplishing your unpaid travel mission and you can probably deduct them.
- Kiplinger: Charitable Tax Deductions for Missionary Volunteer
- Clergy Tax Law: Deduct Expenses Related to Church Mission Trips on Your Taxes
- Brigham Young University Hawaii: Missionaries & Volunteers — Tax-Deductible Costs
- One in Jesus: U.S. Income and Employment Taxes for Missionaries (Corrected and Expanded)
- san luis rey mission image by Craig Hanson from Fotolia.com