Tax Deductions for International Volunteer Work
Volunteering for a charity that needs your services in an international location can be exciting, but it can also be expensive if you have to cover your own travel expenses. If you do, a lot of the money you spend may be deductible as a charitable contribution on your tax return. If you're counting on this deduction, you should be aware of a couple of issues before writing off the expenses.
If the charity you volunteer for isn't a qualified organization under the tax rules, you're automatically ineligible to take a charitable deduction. Qualified organizations include charities, like the Red Cross, for example, that have received tax-exempt status from the Internal Revenue Service. With the exception of certain Canadian, Israeli and Mexican charities, all qualified organizations are based in the United States. If the international volunteer work is for a foreign charity, you likely can't deduct expenses as a charitable contribution. Even if it's a Mexican, Israeli or Canadian charity, you generally need to earn taxable income in the foreign country before the IRS will let you deduct some of your volunteer expenses.
General Deduction Rules
The tax code expressly prohibits you from taking a charitable deduction for the value of your time. For all other volunteer-related costs, four general requirements must be satisfied. Expenses are deductible if they aren't reimbursed by the charity, they're directly connected to your international volunteer work, you wouldn't incur the expense if you didn't volunteer and the costs aren't for personal living expenses.
Deductible Volunteer Expenses
The most substantial contribution is likely to be the cost of round-trip travel, though some restrictions may prevent you from deducting all of your travel expenses. Generally, your expenses are deductible if there's no significant element of personal pleasure when taking the trip and you're on duty for a good portion of the time. The IRS isn't saying that if you enjoy your trip that you can't deduct the related expenses – it merely means that you can't incorporate a vacation into the same trip. If these restrictions don't apply to the volunteer trip, you can write off the cost of airline tickets, hotels, transportation and even the food you buy. And if the charity asks that you wear a uniform when on duty, whatever you spend to buy and maintain the uniform is deductible as well.
Schedule A Required
Charitable contributions must be itemized on the “Gifts to Charity” line of Schedule A. The drawback is that if you don't have other expenses to itemize, such as mortgage interest or state income taxes, for example, you may save more in tax with the standard deduction. When taking the standard deduction, your volunteer expenses are no longer deductible.
Michael Marz has worked in the financial sector since 2002, specializing in wealth and estate planning. After spending six years working for a large investment bank and an accounting firm, Marz is now self-employed as a consultant, focusing on complex estate and gift tax compliance and planning.