Hi folks,
I am currently working as a non-compensated employee/volunteer for a local city government in California (ie: think volunteer firefighter, volunteer law enforcement, etc.). I’m excited to contribute in making my local community a better place.
For paid work, I currently have income coming primarily via W2 and a little bit via 1099 ($5-10k/year). My W2 work is unrelated to my volunteer work, but my 1099 work is hand-in-hand with the volunteer work (ie: consulting in the fire prevention, law enforcement investigations, etc. space). I have been doing the 1099 work for around 3-4 years now.
To qualify to be a volunteer, we are required to attend a state-certified school for a certificate (accredited by a community college). I paid for the school and temporarily rented out an office in the area for my 1099 work on my own dime. Because of my W2 work, I am over the income requirements for any federal/state assistance for education benefits.
Additionally, there are some things we are issued in our capacity as volunteers, but the majority of things we have to purchase on our own (ie: we are given one set of A uniform, but are required to have B and C uniforms as well). Other items include duty boots, belts, and services (ie: dry cleaning) to maintain these uniform items, which cannot be worn in public.
We are also required to maintain our own insurance through specific associations due to legal liability issues.
- Is any part of the education reimbursable as a tax benefit? (Training cost about $3k in total and another $10k in the temporary space to facilitate this 9-month course).
- Is there a way for me to claim the gear and services I utilize exclusively for this work, especially given my existing parallel work in the space? (I anticipate costs of around $5k-$10k yearly).
- I’ve read of folks claiming volunteer time as an expensed item. Is this a myth? For context, I am contributing a significant amount of time (120 hours in the past 2 months alone) to this endeavor; is it possible to receive any financial benefit from this? The compensated employees are receiving $45/hour as full-time employees in my city, but other cities in the area pay up to $65/hour for personnel with my level of training/experience.
I know these are some off the wall questions, but it would be great to hear the community's perspective on this. Thanks in advance!
Tax questions for non-compensated employees/volunteers
byu/Beneficial-Oil-1657 intax
Posted by Beneficial-Oil-1657
3 Comments
To answer number 3 – you cannot deduct your volunteered time. Here’s some logic to help understand why that is:
Person A works their normal job and they make $3,000 for a week. They go and donate that $3,000 to charity. They have $3,000 of wage income on their tax return and $3,000 of charitable deductions, which nets to $0 that is taxed from that week of work.
Person B volunteers for a week instead of working a job where they would have been paid $3,000. Say they were to get a $3,000 tax deduction for this volunteer time. Now, they have no income to report, but get a $3,000 deduction. This means that even though person A and person B both worked for a week, person B gets an unfair tax advantage by being able to have a deduction for time that they didn’t have to recognize income from.
The “deduction” from volunteering your time comes from the fact that you have to income to report from that time in the first place. So no, there is no way to deduct your time, you just simply don’t have any income to report from it in the first place, so you’re not taxed for the work.
Volunteer time is neither an expense (you didn’t pay for anything) nor a deduction (your labor or time is not a charitable contribution). Your tax benefit for your time is not being taxed on the money you did not receive.
Expenses directly related to the volunteer position may qualify as charitable contributions.
There is a good bit of overlap in some of this that would really depend on the specifics. I would encourage speaking with a credentialed professional (CPA, Enrolled Agent, attorney, or AFSP practitioner) familiar with your state (volunteer firefighter benefits often apply at the state level based on state law).
Re #2, from IRS Pub 526: “You can deduct the cost and upkeep of uniforms that aren’t suitable for everyday use and that you must wear while performing donated services for a qualified organization.” This would be included as a charitable contribution on Schedule A (if you itemize).