As we come to the time of year when most people do their taxes, it is important all Scout leaders understand all of the tax deductions available for popcorn sales and other Scouting related functions. Because every family is different when it comes to taxes, please consult your tax advisor before taking these deductions on your taxes.
The vast majority of Scouting expenses can be deducted under Charitable Contributions on Schedule A, Form 1040. For those who do not know Schedule A on Form 1040 is the place for itemized deductions. As always it is important to keep accurate records of all your Scouting activities in order to take these deductions.
The deductible expenses are those in the performance of a Scout leadership position. However, the leadership position does not have to be formal in nature. Being the Popcorn Kernel is an example of this type of position. Another example is if the Scoutmaster and Scouts are going on an overnight camping trip and you are the ‘second adult’ to fulfill Youth Protection Guidelines. In this instance you are in a Scout leadership role and potential tax deductions apply. I still recommend registering at minimum as a committee member of your Unit and take the required Youth Protection Training so as to avoid any confusion.
Remember, if you are reimbursed by your Unit for any of these items below related to a Scouting activity, you can no longer claim the deduction.
Below are the most common deduction which can be applied under ‘Charitable Contributions’:
For 2014 and 2015, the mileage rate is 14 cents per mile driven in service of charitable organizations. The question is what is ‘driven in service’ mean? This is any mileage driven under the position of a Scout leader. For example, if you are driving your son to a Scout meeting to drop them off, the mileage would not count. However, if you are the Popcorn Kernel and are making a presentation, picking up order forms, or collecting money, the mileage would be deductible. Examples of trips include, but are not limited to, driving to training for popcorn sales, Show and Sell locations, popcorn pick up, popcorn return, Unit meetings, campouts, camp, service projects and Roundtable. Understand, mileage to deliver take order popcorn for your son would not be deductible.
In addition, you may deduct parking fees and tolls to and from Scouting events in addition to the mileage rate.
The Scout Leader’s costs for uniforms, patches, hats, insignia, neckerchiefs, name tags, and other uniform parts are fully deducible provided that they are not of general utility or wear. The cost of upkeep like washing or dry cleaning is also deductible. Your son’s uniform is not deductible.
The cost of materials used in Scout activities (popcorn signs, wood, rope, leather, fuel, water filter elements, first aid supplies, etc.) is deductible, as is the transportation needed to purchase such items.
Scout leaders can deduct the cost of training courses. Examples of instruction courses include Cub Scout Leader Training, Basic Adult Leader Outdoor Orientation (BALOO), Boy Scout Basic Training, Introduction to Outdoor Leader Skills, and Wood Badge. Supplies for these courses like books, maps, and online access fees are also deductible. Courses which go beyond those provided by the Boy Scouts can also be deducted provided they increase your qualifications as a Scout leaders. Examples include CPR classes, Advanced First Aid, Lifesaving, kayaking training, rock climbing training, etc. These expenses are in addition to the mileage to and from training courses as mentioned earlier.
Reasonable costs for your meals are deductible if in connection with a Scout trip away from home. This includes the cost of food for campouts. For meals to be deductible, the trip must include an overnight stay away from home. Please note, unlike expenses for business meals, the cost for meals at Scouting events away from home are 100% deductible for leaders.
Leaders fees for summer camp, camporee, Jamboree, Order of the Arrow functions including NOAC or Conclave, Philmont, Scout conferences, basic leadership training, etc. are deductible.
Donation of Property and Cash
These two items can be difficult to understand. The main reason is most people do not realize to whom they are donating. Understand the Chartered Organization owns the Unit. Any donation to the Unit is actually a donation to the Chartered Organization. In addition, the donation must be for the benefit of the Unit as a whole and not to a specific individual in the Unit in order for it to qualify. If the value in question is over $250, there are specific reporting requirement that must be met. I order for you to take the deduction for Cash or Property, you must receive this documentation from the organization in which you are donating. For further information review IRS Publication 526.
The IRS defines it in this manner, “If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive” (IRS Publication 526). If you purchased popcorn from a Scout last year, you can deduct the amount above and beyond the actual value of the popcorn. For example, on a $10 purchased item you can deduct the “Return to Scouting” of 70% (or $7) on your taxes. Remember this $7 goes to the Council and/or Unit.
I hope this helps you in preparing your taxes this year. Once again, review this information with a qualified tax advisor before taking any tax deduction.
As we start the month of August, it is time to build your Unit Calendar and Unit Budget. As a matter of fact, to get your full point value for Journey to Excellence, Units need to have their Unit Budget “Completed before the next program year”. For many Units, the program year starts sometime in the next several weeks.
Completing the Unit Calendar and Unit Budget requires the Unit Committee, if they have not done this already, to meet over the summer.
Why is it important to do this now?
It is a matter of cash flow.
Typically, this time of year is when your Unit Funds are at their lowest level. Units have depleted their unit accounts paying for camp and other summertime activities. In theory, Units should have just enough in their unit accounts to pay for anticipated awards from camp and their reserve fund.
However, Units will need funds before the end of the year to pay for re-charter, recruitment supplies, additional awards, Pack Meetings or Court of Honor, and other supplies.
Units should do an audit of their Unit Budget from last year. We look at the Personal Management Merit Badge for some thoughts on the subject. Requirement 2 states:
Do the following:
a. Prepare a budget reflecting your expected income (allowance, gifts, wages), expenses, and savings. Track your actual income, expenses, and savings for 13 consecutive weeks [year]. (You may use the forms provided in this pamphlet, devise your own, or use a computer-generated version.) When complete, present the results to your merit badge counselor [Unit Committee]:
b. Compare expected income with expected expenses.
- If expenses exceed income, determine steps to balance your budget.
- If income exceeds expenses, state how you would use the excess money (new goal, savings).
The biggest piece is reviewing the planned expenses versus the actual expenses. How close were you? Were there unforeseen expenses? How do these expenses compare to anticipated future expenses?
Once the review is complete, I recommend sharing this information with your Chartered Organization. There are a several reasons for this. First, sharing this information shows how the Unit is thrifty with the funds they have. Next, it shows transparency. There are no secrets that the funds were used for Scouting activities. Third, it may demonstrate the future needs the Unit may have and how the Chartered Organization can help. Finally, the Chartered Organization may need this information to assist with their financial statements. Remember, the Chartered Organization is the one who owns the Unit and are financially responsible for the funds used within ‘their’ Unit.
Once this review is completed, it is time to earn money for next year.
Fortunately, popcorn is just around the corner.