By Sgt. Gregory Solman
Because non-paid active duty in the California State Military Reserve is regarded by the Internal Revenue Service as a form of volunteer service, some of the expenses associated with CSMR service can be deducted from individual returns (by those who itemize) “exactly as any other charitable work,” says Sgt. Wahba Farag, president and CEO of TaxMaster of California in Glendale.
Although most taxpayers cannot deduct the cost of commuting to their workplace, volunteers for specified organizations may deduct mileage expenses from their home to their base on drill days, or to any place they visit while on official duty. Obviously, members can’t double-count miles for which they will be reimbursed from State active duty, except where there is a difference between the reimbursement rate and the charitable mileage rate applicable to the duty period. For the current rate and any other tax questions, consult the IRS or a tax professional for guidance beyond the broad guidelines of this article, Farag cautions.
When calculating mileage, do not generate the figures on a computer record, using a program like a spreadsheet. Rather, go to an office supply store and obtain a mileage record book (about $6) that is formatted to prevent users from manipulating the mileage to suit a desired outcome, either in advance or after the fact. The preferred record of mileage, according to the IRS, is an actual odometer reading with the start and end, not a Google map or any other Internet based estimate of the distance between places. Farag says the IRS would probably consider sign ins to activities such as duty days as a reasonable proof in replacement of lost or destroyed travel records.
Soldiers might also consider maintaining a personal journal or desk calendar in which the taxpayer writes down the purpose of the trip, the principals visited, and nature of the activity, says Sgt. 1st Class Robert Davison, retired corporate and personal income tax preparer.
With regard to uniform items, soldiers must include their yearly uniform allowance as income as well as any active-duty pay (Form 1099-Misc.). However members could deduct the difference between the cost of necessary uniform items they purchased out of pocket versus what was reimbursed from the annual state uniform fund.
Farag says the IRS permits some depreciation of capital equipment and deductions for expendables under certain circumstances. If, for example, a soldier buys coffee for his group, or provides stationery for her unit, or adds a research item to the library, that is likely deductible. The IRS rule of thumb to remember: Are the expenses “reasonable and ordinary?” But Farag considers that an area in which soldiers should consult their own tax professionals. Likewise, the use of a particular laptop computer or projector for presentations could be potentially depreciated based upon the percentage of its use dedicated to CSMR business. “If it’s multipurpose, say you use the computer for other things, you could allocate a certain price per hour to the [CSMR] equipment use and depreciate the scheduled duty life, which is usually three to five years,” Farag says.
Deducting meals on drill days, even if soldiers live very far from their base of operations, or during active-duty call up, is “ambiguous,” Farag says. “If I have to stay away from home for a few days, certainly. But the rules for meals are way too complicated to construct a general guideline.”
Davison says that there are other items that can be reasonably deducted: ID pouch pockets; boot care products; field equipment, such as knee and elbow pads, rucksacks, Kevlar helmets and load-bearing vests; on-base or off-base living expenses for staying on or near a base for extended training.
Davison says that soldiers should not be shy away from taking legitimate deductions, but be cautious about allocating percentages of expenses between private and CSMR use. “Generally, that practice exposes the taxpayer to increased IRS scrutiny.”