For my church’s short-term mission trips, participants give the church money for a special fund that’s used to pay their trip expenses (airfare, lodging, and so on). Some participants believe the money they spend for a trip is tax deductible and should be listed on their contribution statements. A mission organization I contacted agrees with this thinking. My understanding, though, is that only funds for a ministry and not for an individual are deductible. Who is correct?
I will defer to the guidance I offer on charitable contributions and mission trips in chapter 8 of the Church & Clergy Tax Guide
. Based on your description, I believe this scenario, adapted from the guide, most closely resembles your situation:
Who pays travel expenses (transportation, lodging, meals): Church
Does the church receive designated contributions from participants or others? Yes, from participants, in the amount of their travel expenses paid by the church.
Tax consequences (assuming that the trip was preauthorized by the church board or membership and furthers the church’s exempt purpose):
- Payments by participants to their church are deductible as charitable contributions if the trip involves “no significant element of personal pleasure, recreation, or vacation.”
- Participants’ payments can be reported by the church treasurer on giving statements (if expenses are $250 or more, the church’s receipt must comply with substantiation requirements described in this chapter).
For further details on how trips should be authorized, and how the IRS defines “personal pleasure, recreation, or vacation,” I would refer you to chapter 8 of the Church & Clergy Tax Guide
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.