Volunteering: We encourage participation by offering the employees reimbursement for the mileage. What are the tax implications? Does the T&E expense need to include a tax charge or tax deduction? Is the company required to have insurance?


Your company may deduct travel expense reimbursements for your employees participating in school mentoring programs. According to IRS Publication 526 entitled "Charitable Contributions," travel expenses while in service to a charitable organization are tax deductible. Publication 526 states that non-profit schools are charitable organizations.

Publication 463, "Travel, Entertainment, Gift, and Car Expenses" outlines when travel expenses are deductible. Travel expenses between the employee's home and the school and between the school and your office are always deductible. Travel between your office and home are never deductible. Note that Revenue Procedure 2007-70 states that the maximum deductible reimbursement for use of a personal car in service to a charitable organization is 14 cents per mile.

According to IRS Information Agent Mr. Carpenter (ID# 027360), the reimbursement would not be reported on your employee's W-2 provided the expenses are being reimbursed as part of an accountable plan, meaning the employees document when they are volunteering at the school. If there is no documentation, then the reimbursements would have to be reported on the W-2 and it would be up to the employees to take the deduction.

In publication 526, travel expenses are covered on page 5 on the right column.

In publication 463, the graph outlining when travel expenses are deductible (Figure B) is at the top of page 14.

TAPN has a summary of IRS Revenue Procedure 2007-70, which lists IRS maximum mileage rates. Also see TAPN's IRS Mileage Rates.

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