Volunteer Work and Tax Returns

Volunteering is a fulfilling and important endeavor. Volunteering isn’t about making money. However, there are certainly volunteer positions that offer some financial incentive. Although these payments are usually small, this income is still subject to taxation. As tax advisors, we have examined volunteer work and tax returns in detail and present the most important aspects to you in this article.

Volunteer Work on Your Tax Return – What Do You Need to Know?

Volunteer work must always be reported on your tax return as soon as you receive income from it. It doesn’t matter if the income is very small. However, income or so-called expense reimbursements from volunteer work do not always have to be counted as regular income. Up to 720 euros per year of income from volunteer work is tax-free. Starting in 2021, this amount will increase to 840 euros annually. Expense reimbursements up to this amount must still be entered by employees in Schedule N of the tax return under the heading “Tax-free expense reimbursements/income.” If this tax-free allowance is exceeded by income from volunteer work, all additional income counts as regular wages and must also be listed in Schedule N as taxable wages. The same rules apply to self-employed individuals. However, the information is reported in Schedules S and SO.

What counts as volunteer work?

Volunteer work must be recognized by the tax office to be considered for tax purposes. The volunteer position must be part-time and may take up no more than one-third of the time spent on your primary occupation. Whether you have a “regular” primary occupation or are a student, homemaker, retiree, or unemployed is irrelevant for the recognition of the volunteer position. It is also important that your volunteer work is performed for a public-law or non-profit organization. Activities for associations or so-called special-purpose enterprises may also be classified as volunteer work. Which volunteer positions are recognized is further specified in Sections 52 through 54 of the German Fiscal Code (AO).

Note: Any activities within an organization that makes a profit are not classified as volunteer work! Even as an athlete in a club, you are not considered to be performing volunteer work for tax purposes.

Combining Volunteer Allowances with Other Deductions

In addition to the aforementioned tax-exempt allowance for volunteer work, there are other provisions that may apply in excess of the stated 720 euros or 840 euros starting in 2021. In some organizations, you may take on additional volunteer roles, such as serving as a coach. If this applies to you, the trainer allowance can also be claimed. With up to 2,400 euros or 3,000 euros annually starting in 2021, higher income can thus also be received tax-free. For everyone who is not working as a trainer, there is another way to increase the tax-free allowance. For so-called “other income,” there is a tax-free allowance of 256 euros that can be applied in addition to the 720 euros. If the expense allowance exceeds 720 euros, the additional income up to 256 euros can also be received tax-free. The only difference is how it must be reported.

Tax Consulting in Düsseldorf and Oberhausen

We hope you enjoyed this post. Although you have now learned the basics of volunteering and taxes, it is not unlikely that you still have questions. That is exactly why we are here for you in Düsseldorf and Oberhausen with our law firms! Our team is here to assist you with all tax-related questions and matters. Contact us to schedule an appointment.