Hey Nancy so this is my first time filing taxes after being a field organizer. What's the deal with deductions and all that stuff?
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Wonderful question! Sadly, I have no idea. I put this question out to my tumblr audience and received the response below. I don't know the person who responded so please bear that in mind taking his/her advice. That said, thank you so much anonymous tax knight in shining armour!
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Taxes. I’m not a tax attorney, but I do handle taxes as a legislative issue on the Hill. Sooooo … I probably don’t know what I’m talking about. :)
For your campaigner asking for help with campaign related expenses, first off, I’m assuming they were paid as an employee, not an independent contractor. I hate hate hate campaigns that pay people as contractors. It makes paying taxes hell for young campaigners. Oh, and it’s what Republicans do.
You can deduct Employee Business Expenses (mileage) AND Moving Expenses, but this would be an Itemized Deduction. Most people just take the Standard Deduction ($5,950 for a single taxpayer). In its infinite wisdom, our government has decided that Itemized Deductions are hella confusing, so they just hand out a standard deduction that says “We’re sure you did some shit that earned this, we trust you.”
So it doesn’t make sense to take the Itemized Deduction UNLESS your cost of moving PLUS the mileage are more than the Standard Deduction. You can also itemize a lot of other things, like medical expenses, state and local taxes, mortgage payments, etc. Hopefully you didn’t get medical expenses on the campaign, but those dog bites can happen.
At the IRS’s reimbursement rate of 55.5 Cents Per Mile for driving, and 23 Cents Per Mile for moving, let’s say you moved from DC to Jackson, Mississippi (Hey, I did once) for a total of 978 miles (ish). That’s $224.94. You’d have to have driven around 10,409 miles on the campaign in order to have a reason to itemize the deduction instead of taking a standard deduction. That’s a lot of driving. And that’s for the campaign. That’s not going from your apartment to the office. That’s going from one field office to another field office, or to an event, and back again. Or driving beloved yard signs to a county party in the middle of no where …
Hope this helps!
Don't forget charitable donations, too! Those can be deducted.
ReplyDeleteYeah, I've been itching to itemize, but it's just soooo far away from happening. Though it's useful to remember the one kind of deduction young staffers are likely to have that they *can* deduct without itemizing: student loan interest! You can deduct it above-the-line in addition to the standard deduction.
Thanks for this post! Probably one of the most useful seeing how I'm utterly useless when it comes to taxes! Never did deductions before on my taxes but after a move from Michigan to Florida for a campaign and 12,500 miles on my car for the campaign I'm realizing that this is a deduction that I really should do this year!
ReplyDeleteI’m an Enrolled Agent, so taxes are kind of my thing. Just a bit of clarification and update…
ReplyDeleteThe new mileage rates for 2014 are $0.56 per mile for business miles and $0.235 for moving mile. The standard deduction for a single taxpayer is $6200. These numbers change every year.
Moving expenses are an adjustment (taken “above-the-line”) rather than an itemized deduction. Unfortunately, very few campaign workers qualify because they have to meet the distance and time tests. Distance is less of a hurdle, but the time test is that an employee needs to work in the area to which they are moving for at least 39 weeks in the 12 months following the move (there are exceptions and different standards for self-employed individuals). If you think you qualify for this, you’ll need to use Form 3903 to calculate your adjustment.
Unreimbursed Employee Business Expenses fall into a category of deductions that need to add up to 2% of a taxpayer’s income before they even start getting added to itemized deductions. Beyond mileage, staffers may be able to take a portion of their phone bills, food for volunteers, office supplies like clipboards or pens, or anything else that they pay for out-of-pocket that isn’t reimbursed to them in some way. Campaign staffers may be able to include some expenses, like meals and lodging, if their campaign jobs qualify as temporary job assignments away from a tax home. “Tax home” is a fairly complicated concept, and I’d recommend talking to a professional about the specific circumstances before making a determination. Form 2106 is used to report Unreimbursed Employee Business Expenses and flows onto Schedule A Itemized Deductions.
Schedule A, Form 2106, Form 3903, and (more importantly) their instructions, are available at irs.gov. Just use the search box in the upper right-hand corner.
The gold standard for tracking mileage is a contemporaneous logbook that documents the date, beginning odometer reading, ending odometer reading, destination, purpose, and miles driven. Special logbooks can be purchased at office supply stores at reasonable prices, but a notebook that records the same information is just as valid. There are new apps out there to track mileage, but there hasn’t been an official ruling on whether the IRS will accept that in an audit—mainly because they just haven’t gotten around to it. The IRS is always a bit behind the curve on technology trends.
The biggest problem I see with campaigns and their pay is that so many staffers are paid as independent contractors rather than employees—and the ramifications of that are not always made clear to the staffers at the time they are hired. Many of the staffers that I have dealt with don’t even know that they aren’t having taxes withheld until they get a 1099 instead of a W2. If you are an independent contractor, you need to keep track of every expense, because they are deductible business expenses from dollar one, but the burden of paying both halves of Social Security Tax and Medicare Tax fall on you. Independent contractors should expect to owe money to the government at the end of the year.
If I can give one bit of advice to staffers, it’s to maximize reimbursements over actual pay. It doesn’t cost the campaign more to reimburse you $100 than it does for them to pay you $100 and have you spend that money on unreimbursed expenses (in fact, if they are doing it right, it should be cheaper) and it will save you money in the long run.
Thanks so much for this!!! Very helpful!!!
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