Tax Deduction Could Include Vacation Expenses

Tax Deduction Could Include Vacation Expenses

My tax deduction could include my vacation expenses? That can’t be true! Oh, but it can be. But before you go online to book that Hawaiian dream vacation – just make sure you know the facts. If you are traveling to work for a charity, you may be able to deduct certain expenses of the trip as a charitable deduction.

Criteria for tax deduction on vacation expenses

  1. You must volunteer to work for a qualified organization. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Select Check tool to see if the group is qualified.
  2. You may be able to deduct unreimbursed travel expenses you incur while serving as a volunteer. However, you can’t deduct the value of your time or services.
  3. The deduction qualifies only if there is no significant element of personal pleasure, recreation or vacation in the travel. However, the deduction will qualify even if you enjoy the trip. They say, “Hard work is its own reward.”  But it may also help lower your tax bill.
  4. You can deduct your travel expenses if your work is real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
  5. Deductible travel expenses may include:
    • Air, rail and bus transportation
    • Car expenses
    • Lodging costs
    • The cost of meals
    • Taxi fares or other transportation costs between the airport or station and your hotel

The criteria are significant, but the rewards for a trip that is focused on serving others and improving our world, done within the requirements above, can provide all kinds of benefits.

IRS Publication 526, which provides guidance on Charitable Contributions has additional information on this topic.

Need More Information?

If you have any questions about this not-for-profit update, please contact your WithumSmith+Brown professional, a member of WS+B’s Not-for-Profit & Education Services Group or email us at [email protected].

Jim Decker, CPA, Partner
Practice Leader, Not-for-Profit Services Group
[email protected]
732.828.1614

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To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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