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  • 1.  Tax Regulations - reasonable expenses for charitable donations

    Posted 6 hours ago

    I've been approached by one of our board members to provide a document stating that for this person's tenure on the board, all expenses (flights, car rentals, etc.) are NOT reimbursed by the university.

     

    The trustee states that under current tax law, deductions can be made for reasonable expenses as long as the expense does NOT relate to a vacation, or the person only provides minimal work for the nonprofit when incurring the expenses.

     

    I am not familiar with a statement such as this.  Does anyone have experience in this or have a document to share?

     

    As always, any help or guidance would be appreciated.

     

    Scott

     

    Scott L. Billhartz '85

    Senior Director of Advancement Services and Stewardship

    McKendree University

    701 College Road

    Lebanon, IL 62254

    (618) 537-6869

    slbillhartz@mckendree.edu

    www.mckendree.edu

     

    Providing a high quality educational experience to outstanding students.

    Academic Excellence--Engagement--Responsible Citizenship--Lifelong Learning

     

    Description: Description: McKendree-Logo-for-email-si

     

     

     



  • 2.  RE: Tax Regulations - reasonable expenses for charitable donations

    Posted 6 hours ago
    It is true, per IRS Publication 526, that unreimbursed volunteer expenses can be deducted. But what those expenses are and what can be deducted are between the individual and the IRS.

    At many institutions, I've advocated for the issuance of a letter to Board members to assist them in this regard. But only when they have performed a required service.

    Here's the language I've previously used:

    Internal Revenue Service regulations allow you to deduct most out-of-pocket volunteer expenses. Such deductions include reasonable expenses for telephone, meals, and travel related to attending meetings or performing roles on the governing body, such as fundraising.

     

    This letter certifies that you were required to be in attendance in City, State on [specified dates] for [stated purposes].

     

    According to IRS code, you may deduct the actual costs of airfare, car mileage (refer to the current instructions for Schedule A of IRS Form 1040 for rates), tolls, parking fees, phone calls, meals, and lodging expenses. However, expenses are only deductible if there is no significant element of personal pleasure, recreation, or vacation involved in your travel. No expenses for a spouse, child, or friend traveling with you are deductible. Assuming your expenses meet these conditions and that you have not received any goods or services in exchange for these contributions-as this letter affirms-they are deductible as charitable contributions.

     

    The IRS code requires written verification from the organization for these charitable deductions. This letter fulfills that requirement. You should keep records of your expenses to claim the deduction. If you request reimbursement from the organization for any expenses, they are not deductible. We recommend consulting your tax accountant for further clarification.

     

    We hope this information helps you plan your taxes, and we appreciate your active involvement. 


    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Tax Regulations - reasonable expenses for charitable donations

    Posted 5 hours ago

    John,

     

    Your suggested language is exactly what I was looking for.   I do have one follow-up question.  You mentioned to include the suggested language 'only when they have performed a required service.'  I'm assuming attending board meetings would be viewed as a required service.  Is that correct?  We have one board member who lives abroad, and this person is trying to find tax relief from expenses related to international travel when attending meetings.

     

    Scott

     






  • 4.  RE: Tax Regulations - reasonable expenses for charitable donations

    Posted 5 hours ago
    Yes - it's basically all expenses a volunteer would incur to fulfill their duties. However, they will have to prove they needed to incur an expense. For instance, if you held a four-hour board meeting and offered Zoom as an option, it might be difficult for them to prove they had to fly in, especially since they arrived a week before the meeting! That's why it's important to indicate when someone was required to be in a certain place at a certain time. On the other hand, their role (i.e., Chair) likely requires their presence, even if Zoom is an option.

    IRS Publication 526 does not use the word "required." On the other hand, an example on page 22 describes a time when someone had to buy a plane ticket to represent the organization.

    I suggest you ask Counsel to craft your standard language. What I shared earlier is what Counsel and I drafted together.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 5.  RE: Tax Regulations - reasonable expenses for charitable donations

    Posted 5 hours ago

    Thank you, John.  As always, very thorough and informative!

     

    Scott