Can I deduct the books & study material if I'm persuing self education; what about on subjects related to a nonprofit endevour

[yogikevturbo]

I want to pursue self-education and the subjects of study relate to a nonprofit endeavour.

[Opus 17 · Accepted solution]

Sounds like no.

There are two provisions to deduct education expenses.  The educational credits and deductions found in publication 970 only apply to education expenses incurred when taking courses and paying tuition to a qualified institution of higher education (that is qualified to participate in federal student aid programs).  Some of those credits apply to tuition only, and some of them can apply to books and supplies, but they both start with taking courses at a qualified higher education institution.

Alternatively, education can be deducted as a work expense against work income if it is to maintain or improve your skills or training for that job.  Education and training can't be deducted if it is to qualify for a new job or change of career.  And, work-related training can only be deducted against income so you would need to be working and earning a salary or be self employed.  Then finally, if you are an employee and not self-employed, work-related expenses are an itemized deduction subject to the 2% rule so the deduction will be limited or unusable depending on your other tax situations.

[yogikevturbo]

what if I'm running my own institution say a ministry can study/reference material like books be donated to my own institution and receive a tax deduction for a charitable donation, & if so what would that look like?

[Opus 17]

First, you can't take a tax deduction for a charitable donation unless that donation is registered with the IRS as a qualified exempt organization.

Second, a donation of personal items to a charity that you have sole control over is problematic to say the least.  One issue is inurement or unjust enrichment.  Is it really a donation or is it a sham designed to give you a tax deduction.  You also can't take a deduction for the donation of use of an item or partial ownership.  Even in the case of a larger organization where self-enrichment is not an issue, partial ownership can be.  For example, the pastor of a poor church that can't afford a computer for the office can't claim a tax deduction for donating his own computer unless he transfers full ownership to the church such that the church keeps the computer even if he resigned or were fired.

An employee or volunteer for a charity can also be reimbursed for out of pocket expenses as long as the charity has an accountable plan -- that is, the only expenses that are reimbursed are those that are approved by the charity and proven by receipts.  Again here the concern is self-dealing.  When I was a church treasurer, and I bought supplies and donated them, I made sure that the pastor signed the approval form and the person with backup signature authority on the bank account signed the check.  

If you are collecting donations from others and reimbursing yourself for expenses, you have a certain potential vulnerability that you would not have if you were a profit-making business and deducting expenses that were related to your business income.

Depending on what you mean by "my own institution" you run several tax and legal risks unless you were to bring on a larger board of directors (or at least one co-chair) and have financial matters approved by someone else.  

Thats not to say that it would automatically be wrong to either claim a donation or reimburse yourself from charity funds, just that it is more risky if you are the sole authority in the institution.

[SweetieJean]

"running my own institution say a ministry" Is this a legal entity, and recognized by the IRS as a charity?
And you cannot deduct expenses related to entering a new profession.

[yogikevturbo]

Our chapel is a startup ministry, I am ceo/president, I have also a vice president, we will be incorporating soon. what makes our ministry different is that we operate study groups, we were thinking about building a small library in our chapel for our ministers to study from; all the material would be related to our ministry activities. However doing this may be financially difficult for an admittedly poor & small ministry in an admittedly small chapel.

[Opus 17]

You can't take a tax deduction until your group is registered as an exempt organization.  (Unless you are a branch/church plant of a denomination that already has a blanket exemption.)  Donations made after the exemption is granted can be deducted on your personal income tax as long as they become the permanent property of the organization even if you left.  It is good practice, but not absolutely required, to have a second person sign off on the donation.    See this for rules on substantiating donations.  <a rel="nofollow" target="_blank" href="https://www.irs.gov/charities-non-profits/substantiating-charitable-contributions">https://www.irs.g...>

Likewise, you can be reimbursed for out of pocket expenses if they are properly substantiated.  Having a second person sign off is good practice but not absolutely required.  <a rel="nofollow" target="_blank" href="https://www.irs.gov/charities-non-profits/exempt-organizations-compensation-of-officers">https://www...>

See here to apply for exempt status
<a rel="nofollow" target="_blank" href="https://www.irs.gov/charities-non-profits/applying-for-tax-exempt-status">https://www.irs.gov/charit...>

[yogikevturbo]

so, therefore, let's say I do all that & get a second signature, what happens if I need a loan to afford the books, can I still donate them and claim the charitable donation deduction, of course, assuming I'm paying the monthly for the loans. By the way, you have been such a trooper helping me with my inquiries, I can't thank you enough, much love to you.

[Opus 17]

If you take a personal loan to buy items that you then donate, you can claim a deduction for the items, because you are responsible for paying the loan back, which means the items get paid for by you sooner or later. If you did happen to default on the loan and the lender cancelled it without requiring payment, that cancelled loan becomes taxable income to you, which would offset the prior deduction.

[yogikevturbo]

Opus 17 you are amazing 🙂 !!!!