Q: 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?
Determining whether mission trip expenses are tax-deductible depends on specific conditions. I will defer to the guidance provided in chapter 8 of the Church & Clergy Tax Guide. Based on your description, here’s a scenario that aligns closely with your situation:
Key Scenario: Tax-Deductible Mission Trips
- Participants: Adults
- Who pays travel expenses (transportation, lodging, meals): The 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 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.
For more details on how trips should be organized and how the IRS defines “personal pleasure, recreation, or vacation,” refer to chapter 8 of the Church & Clergy Tax Guide.
Frequently Asked Questions
1. What qualifies a mission trip as tax-deductible?
A mission trip qualifies as tax-deductible if it is preauthorized by the church and primarily furthers the church’s exempt purpose. It must lack a significant element of personal pleasure or recreation.
2. Can participants deduct the cost of travel expenses?
Yes, participants can deduct the cost of their travel expenses paid to the church if the church directly pays for the trip’s costs and the trip aligns with the church’s purpose.
3. What must be included in the church’s contribution statement?
The contribution statement must include the participant’s name, the amount contributed, and a statement confirming that no goods or services (beyond intangible religious benefits) were received in exchange for the donation.
4. What happens if a trip includes personal recreation?
If a mission trip includes significant personal recreation or vacation elements, participants may not deduct the associated expenses as charitable contributions.
