Tax Tips for Doctors Volunteering Their Services This Summer

July 22, 2014

Many physicians travel and volunteer their services. However, if you plan to deduct your volunteer-related expenses, there are rules that you should know about.

I've discussed the vital role having a great CPA plays in the personal and business tax planning of every doctor before in several different contexts. Despite the growing sensitivity and importance of professional guidance in this area, I'm still shocked by how many doctors still do their own taxes. Given both the recent tax law changes and the importance of maximizing what you retain out of every dollar earned, it's time to not only have an accountant, but one that's going to go beyond telling you what you owe and show you how to make that number as small as legally possible.

One such CPA who works with physicians is TJ Casey, president of TJ Casey, CPA in Mesa, Ariz., who shared the following IRS bulletin with me recently. The level of detail on this one narrow issue illustrates the level of detail good tax planning now requires. As always, nothing here is specific tax advice, so discuss this issue with your own CPA in detail, if you plan to donate your services to charity this year, and if you'll travel as part of the service.

Here are five tax tips you should know if you travel while giving your services to charity:

1. You can't deduct the value of your services that you give to charity. But you may be able to deduct some out-of-pocket costs you pay to give your services. This can include the cost of travel. All out-of pocket costs must be:

• Unreimbursed;

• Directly connected with the services;

• Expenses you had only because of the services you gave; and

• Not personal, living, or family expenses.

2. Your volunteer work must be for a qualified charity. Most groups other than churches and governments must apply to the IRS to become qualified. Ask the group about its IRS status before you donate. You can also use the Select Check tool on IRS.gov to check the group's status.

3. Some types of travel do not qualify for a tax deduction. For example, you can't deduct your costs if a significant part of the trip involves recreation or a vacation. For more on these rules see Publication 526, Charitable Contributions.

4. You can deduct your travel expenses if your work is real and substantial throughout the trip. You can't deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.

5. Deductible travel expenses may include:

• Air, rail, and bus transportation;

• Car expenses;

• Lodging costs;

• The cost of meals; and

• Taxi or other transportation costs between the airport or station and your hotel.

For more see Publication 526, Charitable Contributions. You can get it on IRS.gov or by calling 800-TAX-FORM (800-829-3676).