As my clients, friends, and colleagues know, I love to travel. While my vacations have not (unfortunately) been tax-deductible, they have been memorable experiences that will stay with me forever. For that reason, I often encourage my clients to take vacations; after all, we don’t know when our health will change and we’ll no longer even be able to travel. You don’t want to be one of those people who will someday look back with regret on the things you didn’t do.
But if creating life-long memories isn’t enough of a motivation for travel, here’s another: A well planned vacation might also qualify you for a tax deduction. Imagine enjoying a life-changing trip while also getting back some of your hard-earned tax dollars from the government in the process.
So what kinds of trips qualify? Here are examples of four potential trips, only two of which are tax-deductible. Can you figure out which ones?
- You travel to Haiti to provide support to an orphanage. You bring medical supplies, school supplies, and clothing, and stay for seven days helping out in any way you can while on site.
- You sign up through REI Adventures (a boutique travel company I used for a 2011 trip to the Galapagos) for a five day trip where you work on restoring the Inca Trail in Peru.
- Habitat for Humanity is offering a trip to the New Jersey shore to help build houses that were destroyed by Hurricane Sandy in 2012, and you want to put your home renovation skills to good use.
- You’re a nurse and anxious to help others, so you embark on a trip with Doctors Without Borders to the Syria/Turkey border to help refugees fleeing from the Syrian conflict.
While each trip would surely be memorable, only the third and fourth options would actually be tax deductible. That’s because they’re ‘vacations’ offered through legitimate, IRS recognized 501 (c) (3) organizations, while the first two are not. Therein lies the distinction. If you are taking a ‘helping vacation’ that is offered through a 501 (c) (3), it is deductible. On the other hand, if the trip isn’t offered through a 501 (c) (3), then it is not tax deductible — even though you may be helping Haitian orphans or rebuilding the historic Inca Trail, you’ve traveled there on your own and not through any recognized charity.
As with all things tax-related, there is a gray area. For example, what if you traveled with National Geographic — a recognized a 501 (c) (3) — to Egypt to work on an archeological dig for four hours a day, but were then able to travel freely for the rest of the day? Would that qualify for a tax-deduction? Would a pro-rata amount qualify for a tax-deduction? These questions are less clear, and in those instances you should consult either your tax-preparer or the IRS’ Publication 526: Charitable Contributions.
While it takes a little extra planning, there are ways to combine good deeds with tax-benefits. You just need to follow the prescribed rules and guidelines of the IRS.
The author’s next vacation will be to Africa in the fall for a three-country safari, followed by a four-day visit to South Africa. She is still working on ideas for 2014.
Copyright: boarding1now / 123RF Stock Photo
