July 10, 2008
For the original article, please click here.
A week ago, the U.S. Internal Revenue Service raised the mileage deduction for the rest of 2008 to 58.5 cents a mile (an increase of 16 percent) because of the rising price of gasoline. "Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," said IRS Commissioner Doug Shulman. "We want the reimbursement rate to be fair to taxpayers."
It’s certainly legitimate to recognize the soaring cost of gas and adjust tax benefits accordingly for Americans (at least for those who take deductions). But, wait! Here’s the rest of the news:
The mileage deduction for the first half of the year was 50.5 cents per mile.
The 58.5 cents per mile deduction applies to business use of a personal vehicle. Drivers who use their vehicles for medical reasons or to move can deduct 27 cents per mile, up from 19 cents in the first half of the year. The use of a vehicle for charitable purposes is set by law at 14 cents and wasn't increased. 1
The tax deduction for driving as part of volunteer service has been 14 cents for the last 10 years, having been raised from 12 cents by the Taxpayer Relief Act of 1997. Some of us can remember the struggles in the 1970s and 80s to get past 7 cents a mile and the determined efforts of first Representative and now Senator Barbara Mikulski (D, Maryland) to champion better tax support for volunteer drivers. Since then, however, there has been little interest in introducing the necessary legislation to get Congress to raise the reimbursement/deduction rate for charitable driving.
Given the life-and-death nature of most volunteer driving, this situation is unacceptable.
If the Federal government wants to show its respect for volunteers who deliver meals to the homebound, assure that seniors get to doctor’s appointments, assist patients needing dialysis treatments, and any of the wide variety of important services we rely on volunteers to provide, it’s time to demonstrate “support of volunteering” in a tangible way: raise that rate!
Not Just the USA nava ben moshe private email: firstname.lastname@example.org
In preparing to write this commentary, I did some research into how the tax code of different countries treats volunteer service. I found some interesting information – and hope that site visitors will add more explanation in response. For example:
Canada has generally followed the American lead for all it’s mileage allowances and also continues to use 14 cents for its charitable deduction.
England handles automobile expenses differently in its tax code. Citizens may drive a certain number of miles tax-free and then calculate tax owed on car usage above that:
HM Customs and Revenue sets tax-free mileage rates under the Fixed Profit Car Scheme (FPCS). This scheme allows for the payment of mileage allowances without the need for either the organisation or the volunteer to keep detailed records. The scheme applies to both employees and to volunteers.2
The good thing is that volunteers are treated equally and can include their charitable driving in their calculations for their total car use. But this also means that charitable driving is not exempted from tax calculations.
In Australia, there are no specific provisions of the income tax law that allow deductions for expenses incurred while undertaking voluntary work. This creates a catch-22 like this: “deductions claimed by the taxpayer would not be an allowable deduction for the reason that the deductions were not incurred in gaining or producing assessable income.”3 Of course, this discounts the fact that the expenses were actually a donation to the charity – income to them.
At this point, my head was swimming enough to stop reviewing tax codes (and apologies for any misinterpretations above!). But there seem to be two common assumptions at work, namely:
If volunteer-related tax issues are ever considered, they are rarely re-visited and often therefore get totally outdated before anyone remedies the oversight.
While the US and other countries deal with the tax value of cash and property donations to charities, they basically do not consider volunteer out-of-pocket expenses as donations. A gift of $100 in cash is recognized as both revenue to the charity and an exact cost to the taxpayer; paying for $100 in gas or for art supplies to complete a youth activity is not acknowledged as $100 of value to the organization, let alone as a gift from the volunteer.
Whether or not you believe that the tax code is where such philosophic issues should be decided, as long as there is some attempt to deal with volunteer expenses at all, we ought to make sure it’s done properly.
What Can We Do?
In the US, the only way to change the current mileage deduction is through the legislative process. Congress must pass a law and the President must sign it. So…are we ready to make some noise?
Write to your Representatives and Senators, and get all the volunteers in your program to write, too. I’ll help. Click here for a “template” note that can be cut-and-pasted or modified to insert into an e-mail or old-fashioned letter. Let’s see if we can create some buzz…and maybe some positive action!