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Unreimbursed Travel Expenses

  • 1.  Unreimbursed Travel Expenses

    Posted 11-22-2019 05:06 PM
    Hi All,

    We have a board of trustee member requesting a receipt for unreimbursed travel expenses they incurred while they were providing voluntary services for us. Based on what I have found in the archives the proper way to handle this is to provide them with a statement acknowledging the voluntary service performed, the dates of service, a statement about whether they were provided any goods or services in exchange, and directing them to their tax advisor as some of their unreimbursed expenses might be tax-deductible. My question is whether folks book the travel expenses (not the service) as an in-kind gift. My gut says "no" but I've never handled one of these before.

    Thank you in advance!

    Rachel Ellis

  • 2.  RE: Unreimbursed Travel Expenses

    Posted 11-22-2019 05:22 PM
    You are correct in the standard way to approach this.  However, what you are providing is not a receipt - nor should it be (IMHO).  But as you are not verifying the expenses and issuing an in-kind receipt, then I would not record a gift in my system.

    That is not to say that everyone follows this guidance.  Some organizations will - but that involves a bunch of extra work on the part of your staff.  And does demand that you obtain proof of payment to ensure your receipt goes to the individual who paid the expense.

    Unless we are talking about a sizeable some - an amount that will materially impact your totals and the donors' giving history - I lean toward your stated approach.  We did this 100% of the time for 100% of our volunteers.  I have previously shared a copy of the Volunteer Expense Letter they can use (per IRS Publication 526) to claim a deduction.  But the onus is on them and their tax advisor to determine which expenses qualify as deductible.

    And with the change in tax laws and the increase in the standard deduction, I would imagine most donors won't even need the latter (only 8-10% of tax payors itemized last year).


    John H. Taylor
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987

  • 3.  RE: Unreimbursed Travel Expenses

    Posted 11-25-2019 09:12 AM

    Certainly, I would agree on all the main points: while unreimbursed expenses incurred in the course of performing services to a qualified organization are tax-deductible to the taxpayer (if they itemize deductions), those expenses are not actually contributions to the charity and the best practice would be that they are not recorded as gifts by the charitable organization.


    On the other hand, I would probably emphasize the similarity between the documentation that we provide to the volunteer and the documentation that we would provide in the case of a charitable contribution.   The IRS doesn't use the word "receipt" in either case, and in fact uses the same term, "acknowledgment," in both cases.


    The acknowledgement provided to a donor who incurred expenses while providing voluntary services must include (from IRS Pub. 526):


    1. A description of the services you provided,
    2. A statement of whether or not the organization provided you any goods or services to reimburse you for the expenses you incurred,
    3. A description and a good faith estimate of the value of any goods or services (other than intangible religious benefits) provided to reimburse you, and
    4. A statement that the only benefit you received was an intangible religious benefit, if that was the case. The acknowledgment doesn't need to describe or estimate the value of an intangible religious benefit.


    These are the same requirements that apply to documenting charitable contributions; the first is very like the requirement to document what the donee received from the donor, and the others are the same exact language.  In addition, in both cases the acknowledgment is required when the donor claims a deduction of $250 or more, and the deadline for obtaining the acknowledgment is the same.


    The way that I think about why those expenses aren't recordable as a gift by the charity is because it's the services that are provided to the charity, as the acknowledgment says, not the related expenses (and gifts of services of course aren't deductible).


    Even so, I think that it's helpful to think of the acknowledgement as otherwise exactly the same as in the case of a charitable contribution.  At least, that helps me organize my thinking about what the acknowledgment in this case needs to include!


    My US$0.02 worth; the usual disclaimers apply.


    Good luck!




    Alan S. Hejnal   

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