I'm a volunteer firefighter. I receive a 1099-MISC for my small compensation. What deductions would apply to me that may be overlooked?

[sfd722]

I am compensated once-per-year.  The City reports this as non-employee compensation and I subsequently pay self-employment tax.  Is there a deduction that I might be missing?

I contribute to our 501(c)3 and deduct that as charitable expense.  I also deduct mileage.

I pay for items to sell at our fire department bake sale.

Our state offers a $100 property tax credit for vehicle registration for being a volunteer firefighter.

Is there something I might have missed?  What about the Mortgage Forgiveness Debt Relief Act of 2007?

[ScruffyCurmudgeon]

Specific answers vary both by state and municipality.

IRS Statement:
http://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/Issues-for-Firefighters

In response to several questions:

1. If your Fire Department bake sale is for the municipal department, then any expenses you incur are charitable.  However, this is not typical.  My experience [38 years FF/medic] was that such bake sales were for the Firefighter Association not the municipality.  Also, although you say your FF org is a §501(C)(3), I have seen that almost all if not all are instead §501(c)(4) which is still a not-for-profit but not technically charitable since it does not meet the conditions - so payments to it or for it would not be deductible if it is a (c)(4) instead of (c)(3) - best to check.
   
   
2. SEE Volunteer Responder Incentive Protection Act   Public Law No: 110-142: in PDF Attachment
   The Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142) included a provision that excludes from taxable income $30 per month of the wages from state or municipal governments to volunteer firefighters and EMS personnel. This benefit has been  extended through 2016. . This can also apply to debt that is discharged in 2018 provided that there was a written agreement entered into in 2017.
   
   To calculate your annual exclusion, multiply the number of months you provided such services by the $30 monthly exclusion. If you worked the entire year as a volunteer, you may be entitled to a $360 exclusion of income received from the governmental unit as wages for your volunteer services. In addition, your excluded wages would not be subject to federal withholding, social security tax, Medicare tax, and unemployment tax.
   
   Be advised, however, that any exclusion of income from taxes would reduce any charitable deduction for expenses paid by you in connection with the performance of such services. For instance, if you provided your own vehicle in the performance of your duties as a volunteer firefighter and in the past have deducted the mileage incurred as a charitable contribution, any exclusion of income would reduce your charitable deduction dollar for dollar. In other words, if you claimed the maximum annual exclusion of $360 for 2010, assuming that your only charitable contribution pertaining to your volunteer services involved mileage of your personal vehicle, unless the charitable mileage exceeded 2,500 miles (or $360 in allowable vehicle expenses), you would not be allowed any charitable deduction in connection with the volunteer service.
   
   

Here follows my general answers to FF questions.

Volunteer Firefighters and Emergency medical responders should not include in reported income the following benefits received as payments by the state or city for which you volunteer:

1. Rebates or reductions of property or income taxes you receive because of services that you performed.

2. Payments you receive because of services you performed up to $30 per month. This value of $30 is the statutory maximum amount that is tax-exempt.

Now as for expenses, if you do not receive a W-2 [yes, some municipalities do issue W-2 for part-time and call firefighters], then all expenses that you incur including mileage as well as any costs for gear and equipment that you yourself pay and are not reimbursed are all deductible on Schedule A as charitable contributions.

Additionally there are some states that offer specific tax credits on the state income tax for call/volunteer fire department members.

Volunteer firefighters are emergency services personnel who assist as first responders to various situations. Fires, car wrecks and industrial accidents all require firefighters for assistance. The expenses incurred by volunteer firefighters can add up throughout the year and those performing such a public service can deduct all viable expenses on income tax returns to help offset the cost of being a volunteer.

Firefighters who volunteer at a station are issued bunker gear, boots, safety goggles and other types of protective clothing to ensure their personal safety while performing duties. Firefighters who choose to purchase additional gear, at their own expense, can deduct the cost of the items as a charitable contribution. This type of deduction is allowed if the items cannot be used for other purposes and the items are solely for the use of volunteering services to the charitable organization, in this case the volunteer fire department.

Mileage

Volunteer firefighters who need to drive between home, work, school or elsewhere to the fire station to take fire calls can log those miles accumulated throughout the year and deduct those as a charitable expense. This type of deduction is taken as a type of charitable contribution as the mileage is accrued to provide a service to the organization. The standard rate for mileage is used to calculate the total deduction available for the current tax year.

Training and Education

Training and continuing education, relevant to firefighting and emergency services, is provided by the volunteer fire station on a routine basis. You may also opt to take additional classes and sessions to further enhance your own skills to make yourself a more qualified firefighter. You can deduct the amount paid for such classes and coursework as an educational expense that was not reimbursed by using the line available on Form 1040. You do not need to itemize your deductions to receive this deduction.

Donations

Volunteer firefighters are required to pay annual dues to the fire company to be considered full and active members of the station. The dues can be deducted from income taxes under the dues and membership section of Schedule A for Form 1040 for those with enough itemized deductions to surpass the standard deduction, or the firehouse dues can be deducted as a straight charitable contribution.

Hope this helps.

[sfd722]

Thank you for your help!  I will need to check on the status of the Volunteer Fire Department.  I'm glad to see someone with the same experience reply to my question, as you could better understand the situation.  

Our department is a combination department, roughly half of the members being paid employees of the city and the other half paid-on-call members of the volunteer fire department (a wholly separate entity).  We share equipment and divide our expenses thoroughly.  We have had a yearly bake sale for several years as a fund raiser, with volunteer members paying dues to the organization as well.  We have no Association for any benefit of our members--it all is spent on expenses relating to our duties.  Our only benefit is the income at $11 per call and paid to us from the City once a year as reported on our 1099-MISC.

One additional question:  If I have a specific amount listed in box 7 as non-employee compensation on my 1099-MISC then do I simply reduce that number by $360 when reporting that?  I'm afraid I may do something incorrectly.  I believe my erroneous "charitable" deduction from what would be considered a 501(c)4 would be surpassed by the $360 deduction anyway.

[ScruffyCurmudgeon]

I apologize for the delay in reply but we had what turned out to be a surprisingly damaging storm on Friday with trees and tree boughs down on power lines throughout and several deaths from being struck by falling tree limbs.  So, only now getting back online.  See reply below.

[ScruffyCurmudgeon]

IRS references:

https://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/Issues-for-Firefighters

IRS website:

Exclusion of Income for Volunteer Firefighters and Emergency Medical Responders

For tax years beginning after 2007 and extended through 2016, gross income does not include:

Rebates or reductions of property or income taxes provided by a state or local government for providing services as a member of a qualified emergency response organization (defined below). Any such rebate or reduction reduces the amount of the income tax deduction for such taxes.

Qualified payments made by a state or local government for providing services as a member of a qualified emergency response organization. The exclusion is limited to $30 multiplied by the number of months the member performs such services. A charitable deduction for expenses paid by the member in connection with performing such services must be reduced by any payment excluded from income.

A qualified volunteer emergency response organization is any volunteer organization organized and operated to provide firefighting or emergency medical services for persons in a state or local jurisdiction and required by written agreement with that state or local jurisdiction to furnish such services.

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How to report it!

Since you received a 1099-Misc, you are allowed to deduct $360.00 from the the amount 

The Form 1099-MISC income should be reported by you on Form 1040 Line 21. Income that is reported on Line 21, is not subject to SE tax [Medicare & FICA - also here known as SECA].

1. In TurboTax, navigate to the 2015 Income Summary [Personal Income - "I'll choose what I work on."] 
   
   
2. Scroll down to Other Common Income and Click on  Income from Form 1099-MISC
   
   
3. In 1099-MISC Summary click on Add a 1099-MISC
   
   
4. To be correct, given the specifics of Voluntary Firefighter stipend, the income should have been reported in Box 3 of Form 1099-MISC, but I have seen where it is instead erroneously placed in Box 7. 
   
   Right Click on the Box 3 entry box to bring up "Supporting Details"
   This brings up a lined page to enter details.
   On the first line, enter the description of the Stipend income and the gross amount
   On the second line enter "Volunteer Responder Incentive Protection Act   Public Law No 110-142" and as a offset amount enter the reduction of $30 per month as a negative number, in your case:  -360
   
   
5. For the question "Does on of these uncommon situations apply?"  enter None
   Then to the question if this involved your main job, enter "No"  and similarly enter "No" with respect to the question about "Intent"
   
   
6. The net compensation will flow to Form 1040 Line 21