IRS TIPS for REENACTORS

As you are all aware, our civil war activities can become expensive. Fortunately, they fall under the heading of out-of-pocket expenses while performing volunteer work. This means a larger percentage of these expenses can be deducted on your tax return under Charitable Contributions if you itemize. This article will explain which expenses are deductible and provide examples for you to use in preparing your tax return.

I. Qualifying Organizations
Most organizations can tell you if they are a qualified organization. The following are qualified organizations.
A. Churches or other religious organizations.
B. Nonprofit charitable organizations such as Salvation Army, Red Cross, CARE, Goodwill Industries and United Way
C. Nonprofit hospitals and medical research organizations.
D. Public parks and recreation facilities.
E. Veteran groups
F. Organizations operated for education, scientific or literary purposes or for civil defense or the protection of children or animals, and nonprofit museums. This would include Reenactment groups that have been certified as non-profit by the IRS.

II. Volunteer Work
Out of Pocket Expenses
Reasonable out-of-pocket expenses incurred when rendering volunteer services to charitable organizations are deductible. However, you may not deduct the value of your time or services. Some of the out-of-pocket costs are limited below.

A. Uniforms and Clothing
You may deduct the cost and upkeep of uniform that you must wear while performing donated services for a charitable organization if they are not suitable for everyday use.

Example 1: You buy a civil war uniform or dress to wear while performing work for civil war events. The cost of the uniform or dress is deductible as a charitable contribution.

Example 2: You buy $45 worth of material to have a civil war uniform or dress made to wear while performing at civil war events. You pay a seamstress $60 to make the uniform or dress. You may deduct the $45 cost of the material plus the $60 labor of the seamstress.

Example 3: You buy $45 worth of material to have a civil war uniform or dress made to wear while performing volunteer services. You make the uniform or dress yourself. You can deduct the $45 of the cost of the material, however, you cannot deduct the value of your time.

Example 4: You buy a pair of $55 earrings to wear while performing volunteer services. Since they are suitable for everyday wear, they are not deductible.

Example 5: You take your civil war uniform or dress to the cleaners to have it cleaned. Since this is required for the maintenance of the outfit, it is deductible.

B. Equipment and Supplies
Equipment and supplies used performing services for charitable organizations are deductible.

Example 1: You buy a civil war tent to use in your impression while performing living history events for the park service. Since this equipment is used while performing services, it is deductible.

Example 2: You buy a three piece fire set to cook on while performing volunteer services. Since this is equipment used in your volunteer work, it is deductible.

C. Car Expenses
You can deduct the cost of gas and oil that are directly related to the use of your car in giving volunteer services to a charitable organizations. You may not deduct general repair and maintenance expenses, depreciation, or insurance. If you do not want to deduct your actual expenses, you may use a standard rate of 12 cents per mile (1990 rate – this is one area you need to monitor for changes). You may deduct parking fees and tolls wheter you use actual expenses or the standard rate.

Example 1: You travel out of state to volunteer for a civil war event. You save your actual gas receipts which amounted to $48. You can deduct the gas you spend as an out-of-pocket expense.

Example 2: You travel out of state to a civil war event to perform volunteer services. Your odometer read 54,500 at the start of the trip. When you returned it read 55,000. You have traveled 1,000 miles at 12 cents a mile = $120 that you may deduct as an out-of-pocket expense.

Note: When you use the standard mile rate, you must maintain written evidence of your travel.

Example 3: While attending a living history event you had to pay $3 a day parking. You may deduct the cost of parking if you use actual receipts or the standard mile rate.

Example 4: While going to Perryville, Ky to perform in the reenactment, you had to pay $1.25 toll fare. You can deduct the toll as an out-of-pocket expense if you use actual receipts or the standard mile rate.

Example 5: You take the bus to go to a living history event to perform some volunteer services. You may deduct the cost of public transportation while performing charitable volunteer work.

Example 6: Your car breaks down while returning from a civil war reenactment. It cost $250 to repair. Since this is a general repair, you cannot take this an out-of-pocket expense.

D. Travel
You may claim an out-of-pocket expense while performing volunteer services for travel expenses while you are away from home. Deductible travel expenses include:
1. Air, rail and bus transporation
2. Out-of-pocket expenses for your car.
3. Taxi fares or other cost of transporation between the airport or station to your hotel
4. Lodging costs
5. 80% of the cost of meals (this is another area to watch for changes)

II When Deductible
To deduct your out-of-pocket expenses, you must pay them in cash or other property before the close of your tax year. A check that you mail to an organization is considered delivered on the date you mail it. If you charge the expense of your bank credit card, it is deductible in the year you make the charge.

IV Limitations
Out-of-pocket expenses you spend, as an individual, when performing volunteer services are subject to limitation. The total is limited to 50 percent of your adjusted gross income.

V How to Deduct
In order to deduct out-of-pocket volunteer expenses you must be able to itemize or use a Schedule A. Those of you whole filed the “short term” or Form 1040-EZ are not eligible to deduct those expenses.

VI Record Keeping
The importance of record keeping cannot be over-emphasized, as a review of tax court cases will attest. If you have out-of-pocket expenses when you donate your services, you must keep one of the following for each contribution you make.

A. A cancelled check.
B. A receipt showing the nature of the company, the date of the expenditure, and the amount.
C. Other reliable written records that include the above information. Records may be considered reliable if they are regularly kept or in the case of small donations, you have items such as buttons, tokens, or emblems.

VIII Miscellaneous
A. Unit Dues
These are only deductible if the organization is both a corporation and has been granted tax-exempt status by the IRS.

Example: The Nineteenth Alabama Infantry Regiment, Inc., meets these criteria. The Alabama Division does not meet these criteria.

B. Event Registration Fees
These fees are deductible only if the sponsoring organization is a qualifying organization as outlined in Section I above.

IX Incorporation and Tax-Exempt Status
It is beyond the status of this article to cover these topics in any detail, but the following remarks may be helpful.
From an individual tax return standpoint, it is not necessary for your unit to be incorporated for you to qualify for the out-of-pocket charitable contributions that we have talked about in this document. However, there are some advantages to incorporation:

1. Limited Liability
The idea here is that only the entity (corporation) can be sued. In reality, suits against corporations also often include officers and employees of the corporation.

2. Obtaining Tax-Exempt Status
You must first incorporate by filing Articles of Incorporation and Bylaws through a State Probate Judge. Once incorporated, you can then apply to the IRS for tax-exempt status under 501 (3). Not that these are separate and distinct processes for which fees (over $100) are required. It is best to seek legal aid, or be prepared to navigate the “bureaucratic minefield” yourself.

3. Bulk Discounts
Corporations can pay for a bulk mail permit which entitles them to a 19 percent postal rate. Non-profit tax-exempt corporations can pay for a bulk mail permit which entitles them to an 11 cent postal rate. Not that you must have 200 or more identical pieces in a mailing to get the bulk rate.

You should consult IRS Publication 521, Charitable Contributions, every tax year to guide you in preparing this portion of our tax return.
A version of this article was presented at the Seminar For the Sixties in March 1991.

Caution:
The purposes of this article is to bring potential tax benefits to your attention. Tax laws are revised every year and each individual’s tax sitution is unique. Be advise to consult your own tax advisor before claiming any of the deductions describ