Tax Deductions for Officers of a Nonprofit Organization
Nonprofit officers include volunteer board leadership positions – president, vice president, secretary and treasurer -- and the employee who is the chief executive officer of the organization. The Internal Revenue Service grants tax-exempt status to nonprofit organizations that have a charitable purpose. People who donate to tax-exempt organizations may receive a charitable deduction. Although the value of unpaid work performed for a nonprofit organization is not tax-deductible, tax deductions are allowed for some volunteer expenses.
Employees can deduct certain unreimbursed expenses incurred during the performance of work for any employer, including a nonprofit organization. For instance, employee commuting costs are not generally deductible, according to the IRS. However, expenses for transportation to and from different work locations are deductible. Tax deductions for work-related expenses differ from those allowed for volunteer expenses. The IRS applies different tax codes to deductions for volunteer and employee expenses. The IRS Publication 463, Travel, Entertainment, Gift and Car Expenses, applies to employee expenses. The IRS directs volunteers to Publication 526, Charitable Contributions, for information about tax deductions for expenses related to volunteer service.
The IRS allows volunteers to take tax deductions for certain unreimbursed expenses related to services performed for nonprofit organizations. Board officers, who are considered volunteers, may deduct transportation expenses to and from the location where the work or service is performed. Drivers may deduct the amount of gas used or take a deduction for the mileage using the current IRS mileage rate. Parking fees and tolls also qualify for a deduction. Also deductible are expenses for buses, taxis, airplanes and trains, as well as expenses for meals and overnight accommodations. Board officers may deduct other out-of-pocket expenses, such as postage, telephone service, copy center charges and expenses for meeting preparation and supplies.
Volunteer tax deductions are not allowed for reimbursed expenses. Expenses must be related directly to the services provided by the nonprofit and may not include personal expenses. The IRS does not allow a deduction for childcare expenses incurred during volunteer work. Transportation deductions cannot include the cost of car repairs or insurance. Deductions are not allowed for travel expenses when the volunteer received significant benefits from the activity, such as recreation or vacation. The volunteer must be performing duties for the organization during most of the trip.
Taxpayers must itemize on annual tax returns to take tax deductions for volunteer expenses. While employee expenses are treated differently under tax codes, an employee may take a charitable deduction when he makes a qualified donation to his nonprofit employer. A tax attorney can advise nonprofit employees and employers about tax deductions for charitable donations, including donations of salary and other compensation, made by employees.