02/26/2021

Nonprofits: Paying Volunteer Expenses

Pay attention to how this is taxed

Nonprofit organizations rely heavily on volunteers.

When this happens, volunteers can incur significant transportation and other expenses in connection with the performance of their volunteer services. An expense payment may be paid to a volunteer, and the amount can be excluded from the volunteer's taxable income, similar to a reimbursement for an employee of the organization. The taxation of expense payments is typically determined by the rules for accountable plans or working condition fringe benefits.

An "accountable plan" allows an employer to reimburse employees' expenses on a tax-free basis if three requirements are met.

Please select this link to read the complete blog post from OSAE Member VonLehman CPA & Advisory Firm.