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Wisdom & Insight
What Is IRS Publication 526?
If you are considering offering tax deductible options for your VolunTourists, this is a document with which you need to familiarize yourself.
Tax season is upon us in the United States and April 15th comes only too soon when you are considering how to make the most of your deductions in an effort to reduce your annual payment to "Uncle Sam." But the question that concerns us as VolunTourism Operators is this:
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What portion, if any, of a VolunTourism experience is tax deductible?
Several years ago, the Internal Revenue Service (IRS) compiled a relatively small document by their standards - only 20 pages in length - that specifically addresses the type of travel expenses that can be deducted and what items cannot be deducted. This Publication 526 gives an excellent description of exactly what the IRS terms as deductible and non-deductible expenses. From page six, paragraph one of the publication:
"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."
The publication continues by providing specific examples of what is considered tax deductible and what is not considered tax deductible. Example #3 states:
"You work for several hours each morning on an archaeological dig sponsored by a charitable organization. The rest of the day is free for recreation and sightseeing. You cannot take a charitable contribution deduction even though you work very hard during those few hours."
Is there a way to still provide a charitable contribution deduction for VolunTourists?
This is a question that we plan to discuss with a tax accountant and present our answers to you in the February newsletter.
For further information on Publication 526, visit the IRS website or download the form as a PDF document.
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