Deductions Volunteers Can Claim on Overnight Trips

Sometimes, volunteering requires an individual to spend a few nights away from home. What does the IRS allow them to deduct on their taxes in terms of food, mileage and lodgings? Julian Block is back with the answers.

Dec 10th 2020
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In three previous columns, I discussed deductions available to a volunteer, someone I’ll call Valerie. She uses Form 1040’s Schedule A to claim unreimbursed, out-of-pocket expenses incurred while she helps raise funds or perform other tasks on behalf of charitable organizations like religious groups, schools, and hospitals.

In this column, I’ll delve into what the law lets Valerie claim or not claim on Schedule A for away-from-home-overnight expenses like, among other things, sumptuous repasts at top-tier restaurants and to-die-for accommodations at plush places. Why would volunteers like Valerie agree to spend prodigious amounts year after year?

She wants to help charitable organizations that need to cozy up to affluent donors. So Valerie dips into her own funds for shindigs like soirees, banquets and conventions, where she mixes and mingles with A-Listers and bold-face names, and encourages them to be charitable.

At home outlays. Let’s focus first on expenses incurred by Chicago-based Valerie when she helps prestigious local charities. She serves on the boards of several outfits and attends their meetings. 

Valerie drives to those sessions, and she pays for parking and her meals. While she can claim the IRS’s standard mileage allowance of 14 cents per mile for charitable driving, along with parking charges and tips for attendants, her meals are nondeductible personal expenses.

Away-from-home-overnight outlays. Valerie also helps important charities in Los Angeles. While there, her deductions for expenses go beyond travel outlays for driving and parking, like those in the preceding example.

They also include lodgings and meals when, say, she attends an organization’s convention as a duly appointed delegate. No deductions for personal expenses like sightseeing, spa charges or concert tickets. Also deep-sixed are all travel or other expenses incurred by her spouse or her children.

The IRS requires lodgings and meals to be “reasonable,” as opposed to “lavish or extravagant.” Do those three adjectives lend themselves to precise definitions that are set in stone? Nope.

An often-overlooked break: Valerie’s L.A. meals are 100 percent deductible, unlike business meals, which are only 50 percent deductible.

This holds true even if let-them-eat-cake Valerie declines to join the ladies who lunch at Le Greasy Spoon. Instead, our savvy fund-raiser opts for her favorite restaurant, the renowned and pricey Le Five Star, where she socializes with scads of potential donors like media moguls, cinema celebrities, and corporate chieftains.

Let’s move to lodgings. Valerie couldn’t care less that the right thing for her to do is to traipse over to a sketchy section of town and select the Bates Motel, a place that’s reasonably priced, because it sequesters guests in diminutive rooms with folding beds and windows that look out on graffiti-splattered walls. Instead, she selects a suite at a luxury hotel.

How will the IRS react to her deductions for meals and lodgings? It could potentially challenge them as “lavish or extravagant.”

How things work out for Valerie might depend on the scope and importance of her charitable work. She can take comfort in how they mostly worked out for Harry T. Cavalaris, a devotee of “deluxe” hotels when he did volunteer work on behalf of his church.

A 1996 decision by the Tax Court rebuffed the IRS’s contention that Harry’s lodging expenses were lavish. “While few would characterize his choices of accommodations as frugal, they were generally convenient,” the court noted.

Harry told the court that he used hotels that hosted the meetings he attended or similarly priced lodgings nearby when rooms were unavailable at host hotels, a practice that saved him additional travel costs. He also cited his prestigious positions at philanthropic organizations; so staying at plush places might have been the reasonable thing to do.

The court, however, disallowed extravagant tips, car repair expenses, spa charges and other expenditures that weren’t incurred for charitable reasons.

Valerie and other volunteers should back up their deductions in case they’re audited. It’s prudent for Valerie to do the following: Save a copy of the convention program and check off the sessions she attends as a delegate. Sign an attendance book for any sessions that provide one. Keep a diary of her convention-related expenses, along with hotel and restaurant bills.

Additional articles. A reminder for accountants who would welcome advice on how to alert clients to tactics that trim taxes for this year and even give a head start for next year: Delve into the archive of my articles (more than 350 and counting). 

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