Charitable Donations of Travel

Q: Tax Playa, My wife is a doctor and she is going to spend 2 weeks in Honduras, next year, with a charitable organization that practices medicine.  Her practice is giving her paid time to go (i.e. she doesn't have to take any vacation time) but we paid for her flight out of pocket.  Can we take any deductions for this?  If so, do we take the deduction for 2006, when we bought the ticket, or 2007,
when she's going?
Bill, Somewhere USA

A: Bill, your out of pocket expenses are deductible under certain limits.  Specifically, she cannot deduct expenses for which she receives a personal benefit...

There are several questions to be asked in this situation (which is common, and more likely to be found in the area of charitable business mileage):

1. Do you itemize your deductions?

If not, you can stop right here.  Only households who itemize their deductions (usually because they carry a sizeable mortgage) and forego the standard deduction can take a charitable deduction.

2. Is the organization for whom you are doing the work a qualified charitable organization?

You can look this up on the IRS website in an online "Publication 78."  You have done so for me and indicated that this organization is qualified.

3. Does your wife receive any personal benefits from the activity?

It doesn't sound like this is the case here, but if your wife is doing a side trip for business, she must pro-rate her expenses between personal and charitable use.  This issue normally comes up in cases of mixed-travel and charitable benefit events.

For travel the standard is higher.  Your wife cannot derive any substantial personal benefits from the travel itself.  Otherwise, it is entirely non-deductible.

4. Does the expense satisfy the four-point IRS test?

Namely, these four points are:

1. Expenses are not reimbursed
2. The expenses are directly connected to the services you are providing
3. The expenses were incurred only because of the services you are providing
4. These are not personal, family, or living expenses

It sounds like you are good here.

5. What type of qualified travel expenses are deductible?

Be sure not to short-change yourself and include all of these costs:

• Air, rail, and bus transportation
• Out-of-pocket expenses for your car
• Taxi fares or other costs of transportation between the airport or station and your hotel
• Lodging costs, and
• The cost of meals

Your final question was on timing.  Since you are a cash-basis taxpayer (as all individuals are), you take the deduction in the year in which the expenditure was made.  Therefore, this is a 2006 deduction for you.