Taxgirl asks:
My husband and I will be traveling to Jamaica Dec 30 – January 6. The first 2 days are for pleasure and the last 3 we will be bringing donations and helping out at an Orphanage. My questions are,
A. is any of this tax deductible
B. if so what do I need for receipts so I make sure I keep them.
C. in what year do I claim it. While we will be in Jamaica in 07 our stay with the orphanage will actually be in 08′.
Taxgirl says:
First of all, kudos to you for taking the time out to do something charitable during the holidays!
Here are the answers to your questions:
A. With respect to the donations of what I assume are supplies, to the extent that you are making the donations and not merely delivering them, those donations are deductible. Unfortunately, your labor is not deductible.
If you drove to your destination, you could take a deduction for mileage (14 cents per mile for 2006 and 2007 – more if you were helping out with Katrina). However, since you traveled by air, you might be able to deduct the cost of the airfare and some meals. Generally, you can take these deductions so long as you spend most of your time performing services for a charity. In your circumstance, it’s a little dicey since you are traveling for a total of 8 days (Dec 30 – Jan 6) and only 3 of those days are service-related. I don’t think that the airfare would reasonably qualify for a deduction. A good rule of thumb (though not endorsed by the IRS who has the authority to determine what “most of your time” means) is that you should spend 70-80% of your total trip time in service to claim travel expenses as a deduction.
With respect to meals and other out of pocket expenses on the days that you are in service, those are likely to be deductible. Note, however, if you plan to deduct unreimbursed expenses of $250 or more, incurred on any one day of service, you must substantiate the deduction with a written receipt from the charity. The receipt must contain a description of your services; a statement as to whether the charity provided any goods or services in exchange for the unreimbursed expenses and a description and good-faith estimate of the value of any goods or services provided.
In no event would sightseeing and other “pleasure related” expenses be deductible.
B. Keep the receipts from the purchases of the donations. If you donate cash, get a receipt. Keep receipts for all travel-related expenses that you will claim, including meals.
C. If you purchased the donations in 2007 and made the donations in 2007, then you can deduct those in 2007. If you don’t deliver the donations until 2008, you will claim those donations in 2008. If you deliver the donations on December 31, 2007, you can take the deduction for 2007 even if you continue to work through early 2008.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
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