Gas money, a stipend, and the line between them

A percussionist drives ninety miles round trip to collect a rented timpani and hands the treasurer a gas receipt. The librarian buys $180 of folders on a personal card. The conductor is paid $200 a concert. A guest clinician gets $500 for a Saturday workshop.

Four ordinary transactions, four different sets of rules, and the difference between handling them well and handling them casually is the difference between a clean set of books and a payment that has quietly become taxable wages.

Reimbursement versus payment

The distinction the IRS cares about is not how you describe a payment. It is whether the arrangement it was made under is accountable. Publication 5137 states the test:

Under an accountable plan, allowances or reimbursements paid to employees for job-related expenses are excluded from wages and are not subject to withholding. An allowance or reimbursement policy (not necessarily a written plan) is considered an accountable plan if: There is a business connection to the expenditure. There is adequate accounting by the recipient within a reasonable period of time. Excess reimbursements or advances are returned within a reasonable period of time.

IRS, Publication 5137, Fringe Benefit Guide (PDF)

All three, not two of three. Publication 463 puts the same test in the second person: your expenses must have a business connection, you must adequately account for them within a reasonable period, and you must return any excess.

An important honest caveat. These rules are written for employees — they sit in IRC §62(c) and Treasury Regulation §1.62-2, and every example is framed as employer and employee. We did not find an IRS source that applies the accountable plan rules by their terms to unpaid volunteers. What we did find is the Form 1099-NEC instructions, which tell payers not to report expense reimbursements paid to volunteers of nonprofit organizations. So treat the accountable plan test as the standard the IRS applies to reimbursing people who do work for you, and as the practical model for volunteer reimbursement — not as a ruling that volunteers are covered by §1.62-2.

What “adequate accounting” means

Specifically: the employee must verify the date, time, place, amount and business purpose of expenses. Receipts are required unless you are using per diem rates, though documentary evidence is not required for individual expenditures under $75 other than lodging.

There are safe harbor timings, and they are more generous than most volunteer treasurers assume. Under the fixed date method: an advance no earlier than 30 days before the expense is paid or incurred, substantiation within 60 days after, excess returned within 120 days after — a maximum window of 150 days. Under the periodic statement method, the organization gives a statement at least quarterly, and substantiation and return of excess follow within 120 days of it.

Where the plan holds together, the effect is invisible on the tax return: If you meet the three rules for accountable plans, your employer shouldn’t include any reimbursements in your income in box 1 of your Form W-2.

What happens when it does not

This is the sentence that should govern how your board writes its expense policy:

Payments, including advances, reimbursements, allowances and so on, made under a nonaccountable plan are taxable wages subject to all withholding when paid or constructively received by an employee.

IRS, Publication 5137, Fringe Benefit Guide (PDF)

And the failure is not partial. Publication 463: All reimbursements that fail to meet all three rules for accountable plans are generally treated as having been reimbursed under a nonaccountable plan. Excess amounts not returned in a reasonable time are treated the same way.

Two patterns fail predictably. The first is the flat allowance — “$50 a month for travel, don't bother with receipts.” Nothing is substantiated, nothing is returned, so it is compensation. The second is worse: an arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay will be treated as a nonaccountable plan. Recharacterizing part of a conductor's stipend as “expenses” to reduce the reported wage makes the whole amount taxable as wages.

Mileage: the number is not the one you think

Almost every board that reimburses driving uses the business standard mileage rate, because it is the number in the news each January. For volunteer driving on behalf of a charity, the applicable rate is different, much lower, and does not move:

The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under § 170.

IRS, Notice 2026-10 (PDF)

Fourteen cents, set by statute rather than indexed, and unchanged in every year shown on the IRS's own rate table back to 2011. Publication 526 confirms the volunteer's side: If you don’t want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution.

For contrast, and because 2026 is unusually awkward here, the business rate changed mid-year: 72.5 cents per mile from 1 January through 30 June 2026, then 76 cents for transportation expenses paid or incurred on or after 1 July 2026. If your policy references “the IRS business rate” without a date, it is ambiguous this year. That said, the business rate is generally not the right benchmark for volunteer driving in the first place.

You can, of course, reimburse a volunteer's actual out-of-pocket costs under an accountable arrangement. The 14-cent figure matters most for the volunteer who is not reimbursed and wants to deduct the driving.

The volunteer who does not ask to be paid back

Some of your members will absorb the cost. Publication 526 governs what they can deduct, and the first rule is the one that surprises people:

You can't deduct the value of your time or services.

IRS, Publication 526, Charitable Contributions

A librarian who spends forty hours cataloging has donated nothing deductible. Their out-of-pocket costs are another matter — deductible if unreimbursed, directly connected with the services, incurred only because of the services, and not personal or family expenses. Gas and oil for charitable driving qualify; general repair, maintenance, depreciation, registration fees, tires and insurance do not. Parking and tolls do. Concert dress qualifies as a uniform only where it [isn’t] suitable for everyday use and must be worn while performing the donated services — which is a real distinction between tails and a black shirt. Childcare that made the volunteering possible is explicitly not deductible.

Then there is a rule your board should know because it creates an obligation on you. Where a volunteer has unreimbursed out-of-pocket expenses, considered separately, of $250 or more related to their services, they need adequate records and an acknowledgment from your organization containing a description of the services provided, a statement of whether you provided any goods or services to reimburse them, and a description and good faith estimate of the value of anything you did provide. They must have it by the earlier of the date they file or their return's due date including extensions.

In other words: the librarian who spent $400 of their own money on your library needs a letter from you, and it is a different letter from the $250 cash donor acknowledgment. Almost no volunteer ensemble sends it.

One more, easy to trip on: where you pay a volunteer a daily allowance, you must include in income any part of the allowance that is more than your deductible travel expenses.

Paying a guest conductor, soloist or clinician

A one-off fee to someone who is not your employee lands in Form 1099-NEC territory, and the threshold has just changed. The current instructions:

File Form 1099-NEC, Nonemployee Compensation, for each person in the course of your business during the year to whom you have paid at least $2,000 in: 1. Services performed by someone who is not your employee (including parts and materials) (box 1a); or 2. Payments to an attorney (box 1a).

IRS, Instructions for Forms 1099-MISC and 1099-NEC (PDF)

The instructions describe the change as: for tax years beginning after 2025, the minimum reporting threshold increased to $2,000 and may be adjusted for inflation beginning in calendar year 2027. So the number is $2,000 now and may move.

Being a nonprofit does not exempt you: However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements.

The deadline is early and single: §6071(c) requires filing on or before 31 January, paper or electronic, and the recipient copy is due the same day. Weekend or holiday pushes to the next business day. That is three weeks after the year closes, which is why the payee's legal name, address and taxpayer identification number need collecting before you write the check, not in January when nobody answers email.

And, again: do not report expense reimbursements paid to volunteers of nonprofit organizations in box 1a. A substantiated reimbursement is not compensation.

The conductor who is paid every week

A guest clinician is straightforward. A music director paid a stipend for every rehearsal and concert, on a schedule your board sets, in a role central to what your organization does, is a genuinely harder question — and the honest answer is that there is no bright line for musicians. The IRS applies the common law test:

For federal employment tax purposes, the usual common law rules are applicable to determine if a worker is an independent contractor or an employee.

IRS, Topic no. 762, Independent contractor vs. employee

The evidence falls into three categories — behavioral control, financial control, and relationship of the parties. Behavioral control asks whether the organization has the right to direct and control what work is accomplished and how, through instructions, training or other means. Financial control looks at unreimbursed business expenses, the worker's investment in tools, whether they offer services to the wider market, how you pay them, and whether they can realize a profit or loss. The relationship factors include written contracts, employee-type benefits, the permanency of the relationship, and the extent to which services performed by the worker are a key aspect of the regular business of the company.

Read those last two against a music director on an indefinite arrangement whose work is the whole point of the ensemble, and you can see why this is not obviously a contractor relationship. If you need certainty rather than an opinion, Form SS-8 asks the IRS to determine the status of a specific individual. Publication 15-A and Publication 1779 are the reference material.

A policy that survives an officer change

• Write the reimbursement policy down, even though a written plan is not strictly required. The unwritten one changes every time the treasurer changes.
• Use one form that captures date, place, amount and business purpose. The business purpose field is the one always left blank and the one that makes the payment defensible.
• Set a submission deadline in the policy — something inside the 60-day safe harbor — and apply it. “Whenever you get round to it” is how a plan stops being accountable.
• Never pay flat allowances without substantiation, and never recharacterize wages as expenses. Both convert the payment into taxable wages.
• Reimburse volunteer driving at the charitable rate, or at documented actual cost. State which in the policy.
• Collect a W-9 before the first payment to any paid conductor, soloist or clinician. Not after.
• Track cumulative payments per payee across the year, so the $2,000 threshold is a fact you already know in December rather than a reconstruction in late January.
• Send the $250 volunteer expense acknowledgment to anyone who spent their own money on the ensemble at that scale. Most of them will not know to ask.

Rehearsal Letter records reimbursements against the member and the event with the purpose attached, and totals payments per payee across the year, so the threshold question and the acknowledgment list are both lookups. This article is general information about reimbursement and information reporting, not tax advice — the worker classification question in particular depends on facts specific to your arrangement, so involve your accountant.