How to Lower Your Taxes and the Cost of Your Trips Abroad: The Quick Guide to Tax-deductible Travel

Did you know that there are thousands of companies that offer travel packages that are 100% tax deductible?  Did you also know that even if you can’t deduct a full travel package, that you can deduct a large amount of your travel costs when doing charitable work overseas?

This is something that recently just changed the way I view the cost of travel – truly opening up the possibilities for me as a cost-conscious traveler who wants to make meaningful adventures a reality for myself!

It’s true – you can lower your taxes by traveling abroad and experiencing new places and cultures through volunteering!

For my American readers, let me go through the basics, so you can rest assured that you meet the requirements of the IRS for this.

The organization must be qualified

First of all, the IRS states that you must volunteer to work for a qualified organization, meaning that they have tax-exempt status. There are several great companies who explain their status on their website (for example – Crooked Trails). If they don’t, you may need to have a discussion with an organization’s coordinator to find out the specifics on which portions of their trips are deductible or not. The great news is – there are several companies organizing trips all across the globe, offering packages that are fully deductible, making it easier for you in the end. When a tax-deductable trip is all-inclusive, you don’t even have to keep track of meals and transportation costs to deduct separately.  It’s much easier!

To find out if the organization you’re looking at is qualified, the IRS has created a handy-dandy little online search tool for us – the Select Check Tool. It’s so easy to use! The tool also helps take some of the guess work out of picking a reputable company you can trust, as all tax-exempt charitable companies must meet government requirements on financial matters.

Your work must be substantial

The next exciting thing about this is, according to the IRS, “You may be able to deduct unreimbursed travel expenses you pay while serving as a volunteer.” This mean that if you don’t go abroad with a US-based, qualified organization or book an all-inclusive package, you still can potentially deduct the cost of lodging, meals and various transportation. The main thing you need to do here is to prove that your trip involved real, substantial work. The IRS states specifically that you can’t deduct the “value of your time or services.” You also can’t deduct the entirety of items if you only have “nominal” duties, meaning that you only had a small amount of duties for a larger, pleasure-based trip. This isn’t to say that you can’t go on a trip with the main purpose of volunteer-based work, and include some cultural exchange and educational aspects.

The possibilities are really endless as long as you do your homework and keep all of the necessary documents from the organization and your trip (like itemized receipts) in case you are audited by the IRS.

Just think of how many more trips become possible for you with this knowledge! Maybe it’s a cultural exchange program with the Maasai tribe in Kenya with Miradi Wild, or a mission trip with your church? With a little online searching and discussions with various organizations – a life-giving, meaningful trip abroad may be easier than you thought! Go get out there. I know I am planning to VERY SOON!

 

Feature Photo Credit: thinkstock/istock/monkeybusinessimages

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