Tax Deductible Expenses

New Member Info on Tax Deductible Expenses

Compiled by Pat Amann, current April 2006

Note that do deduct expenses, you will need to file an itemized tax return.

The general understanding is that all CAP-related expenses including transportation to meetings, uniforms, cost of training, etc. is tax deductible. The legal types at CAP National HQ have published the following information and opinions, but you’ll need to consult with your own tax preparer.

As a federally chartered nonprofit organization, Civil Air Patrol is tax exempt under Section 501(c)(3) of the IRS Code. This entitles members to claim various expenses as charitable contributions to the extent allowed by law. These include the Following:

Membership dues
Expenses for uniforms and training materials
Out of pocket expenses while participating in CAP activities
Mileage on personal vehicles
Travel and Living expenses while participating in CAP activities

Question: What kind of expenses related to CAP can I deduct on my income taxes?

Answer: The deductibility of charitable contributions is discussed in detail in IRS Publication 526, Charitable Contributions. [Note: cut and paste this link into your web browser address bar.]

See examples below from Publication 526 Charitable Contributions

Out-of-Pocket Expenses in Giving Services
You may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:
Unreimbursed,
Directly connected with the services,
Expenses you had only because of the services you gave, and
Not personal, living, or family expenses.

Conventions. If you are a chosen representative attending a convention of a qualified organization, you can deduct unreimbursed expenses for travel and transportation, including a reasonable amount for meals and lodging, while away from home overnight in connection with the convention. However, see Travel, later. You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children.

Uniforms. You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization.

Also see Volunteers' Questions and Answers

Maintaining accurate records and retaining the documentation is the key to maximizing your deduction. Since everyone’s tax situation is unique, you should seek competent tax counsel to apply the IRS guidelines to your specific fact situation.

Question: What CAP related expenses can I deduct for federal income tax purposes?

Answer: The following is quoted from IRS Revenue Ruling 58-279 which is found at 1958-23 IRB 12 (this will have meaning to your tax advisor):

"Held, since the organization [CAP] is a qualified donee under section 170(c) of the [Internal Revenue] Code, the taxpayer may, to the extent of the limitations prescribed in section 170, deduct the nonreimbursed, out-of-pocket expenses directly attributable to the performance of such volunteer services, such as those incurred by the taxpayer for the operation, maintenance, and repair of a personally owned aircraft, automobile, communication system, and telescope, as well as those similarly incurred for the purchase and maintenance of distinctive uniforms which the taxpayer is required to wear while engaged in the official Civil Air Patrol activities and is prohibited from wearing except on such occasions. Such expenses are deductible as contributions "for the use of" that organization. Only those expenditures incurred for operation, maintenance, and repair, which are directly attributable to the use of such aircraft, automobile, communication system, and telescope in performing gratuitous services for such organization are deductible. No deduction is allowed for a proportionate share of general maintenance or general repairs of such equipment.. Held further, the foregoing principle is not extended to allow a deduction either for the fair rental value of such use, or for the depreciation occasioned by such use, of the aircraft, automobile, communication systems, or telescope, in performing volunteer services for the organization. . . . Furthermore, since liability and property damage insurance carried on a motor vehicle is for the protection of the individual, the premiums paid on such insurance do not qualify as an expense attributable to the use of a vehicle and, consequently, cannot be considered a contribution or gift within the meaning of section 170 of the Code."

As always, your personal tax advisor should be contacted to determine how this ruling applies to your individual facts and circumstances.

Question: Often, on CAP missions or at CAP conferences, I am away from home and must purchase meals which cost much more than a meal would if I prepared it at home. Are these away-from-home meals tax deductable as charitable contributions the way that automobile expenses are? Does it make a difference if I must be away from home overnight?

Answer: Yes, you may be able to deduct the cost of certain meals if away from home overnight on CAP business. Contact your tax advisor with specifics. Also see IRS Publication 526 Charitable Contributions and answers below.

IRS Publication 526
Daily allowance (per diem). If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income the amount of the allowance that is more than your deductible travel expenses. You can deduct your necessary travel expenses that are more than the allowance.
Deductible travel expenses. These include:
• Air, rail, and bus transportation,
• Out-of-pocket expenses for your car,
• Taxi fares or other costs of transportation between the airport or station and your hotel,
• Lodging costs, and
• The cost of meals.
Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. For information on business travel expenses, see Travel Expenses in Publication 463, Travel, Entertainment, Gift, and Car Expenses.

Question: What is the mileage IRS tax allowance rate for 2004?

Answer: See IRS Publication 526 Charitable Contributions information below (see link in Answer 73 below for latest edition of IRS Publication 526) for rules on deducting car and travel expenses during CAP activities. Contact your tax advisor with specific questions on deductions.

Car expenses. You can deduct unreimbursed out-of-pocket expenses, such as the cost of gas and oil, that are directly related to the use of your car in giving services to a charitable organization. You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. You can deduct parking fees and tolls, whether you use your actual expenses or the standard mileage rate. You must keep reliable written records of your car expenses. For more information, see Car expenses under Records To Keep, later.

Travel. Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. This applies whether you pay the expenses directly or indirectly. You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses.
The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. [Note: your cadet will have duties.]