Tax Ded for use of Own computer  0092-02  ZZall

                                                           - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -

                          TO:  Interested Ministries                                                                                                          FROM: Jim Bramer, Retired Auditor-CPA
                                                                                                                                                                                    FILE:  0092-02/all  

                          RE:  TAX DEDUCTION FOR USE OF HOME COMPUTER FOR MINISTRY                 Originated:     August 1996                   

            Below is a hypothetical Online Email (EML) thread (THRD) between  Jim@bcidot.org  and probably one of the these Ministry MFTeam members: PAT (Ministry Executive), LEE (Ministry Volunteer Treasurer), and FRAN (Ministry Computer Bookkeeper).  Click here and go to List of threads (THRDs) at www.bcidot.org

FR: PAT

            LEE and FRAN use their computers at home consistently for Ministry purposes. The only Computer that the Ministry owns is the laptop that I have with me as I use it all of the time.
            What is the best way to handle the business and personal use of the respective use of these Home Computers that would fit in with the Ministry's budget and also be kosher with the IRS (for the most part, IRS means both Federal and State issues)?

FR: JIM

        To begin with, let me remind you how the IRS handles the use of vehicles for partial business and partial personal. Let's suppose the following scenario:

    >>> Please Click here for the current IRS mileage reimbursement rate..
    >>> PAT is provided with a Ministry owned vehicle, who pays all of budgeted vehicle expenses .   But occasionally PAT is authorized to use this Ministry owned vehicle for personal purposes. For example, last month PAT used it 100 miles for personal purposes and gave the Ministry a personal non-deductible check for $36.50 .... this reduced the above budgeted vehicle expense. It is NOT necessary for either the Ministry or PAT to report any of this to the IRS.
     >>> While FRAN, for example, received a $ 69.00 Ministry check as FRAN was reimbursed for use of Fran's personal vehicle for 200 miles to do Ministry business last month.    This Ministry expense, of course, is authorized within it's budget; further it is not necessary for either the Ministry or FRAN to report any of this to the IRS.
     >>> The above process is not unique to Tax-Exempt Organizations like this Ministry.  LEE, as a Ministry volunteer Treasurer, used Lee's personal vehicle for 250 miles for charitable purposes and can declare the appropriate amount as a charitable contribution on Lee's personal tax return for this year. This does NOT show up on the Ministry's books at all, but there is merit, in my opinion, for this information to appear within the Donation records as a "Gift in Kind".

FR: PAT

         OK, Jim. I believe I grasp all of this since we have been pretty much doing that for years. I suppose you are laying the foundation with these same concepts in answering my use of Home Computer question.

FR: JIM

            Right on ......   In my opinion, the common denominator regarding use of Computers is hours, rather than miles for vehicles. Please follow this scenario:

    >>>> This is not the current case, but it would seem the IRS would allow Computer usage reimbursement at the rate of something like $3.00 to $5.00 per hour.  However,  since computer technology changes so fast, and current computer life spans are so short, it might be best to accumulate the actual hours spend for both personal and business (Ministry) and divide up the actual costs.  Such costs includes a short life span for the cost of the computer itself (depreciation).
    >>>> PAT has the Ministry owned laptop with PAT anywhere PAT may be, but the Ministry pays all the budgeted expenses associated with the laptop.   Last month, PAT used the laptop 5 hours to do certain personal things. PAT wrote a non-deductible personal check to the Ministry for $25.00 (5 times $5.00  per hour) to the Ministry as a reimbursement of this personal expense. The Ministry uses this check to reduce the costs of Computer within the budget. Neither PAT or the Ministry have to report any of this to the IRS.
   >>>>  On the other hand, FRAN owns the Computer used mostly for the Ministry and pays all of its operating bills. Accordingly, the Ministry reimburses FRAN each month for the business use of this Computer.  For example, last month FRAN's Home Computer was used 70 hrs for Ministry purposes. It reimbursed FRAN a budgeted expense of $350.00.  If this system were used, then FRAN does NOT have to keep track of the Home Computer's actual pro-rated business and personal depreciation or operating expenses, nor does the Ministry or FRAN had any reporting responsibilities to the IRS.
    >>>> Like the above mileage example, this process is applicable to all IRS related entities; it is NOT unique to only tax exempt organizations.
    >>>> LEE, as the Ministry's volunteer Treasurer,  can simply keep a record during the year of how much their Home computer was used for Ministry purposes, and then take the proper amount as a charitable deduction on their personal tax return for this year. Ideally, like the charitable use of the vehicle above example, the Ministry should record in their donation area as a annual "Gift in Kind".

FR: PAT -

        Ok, Jim. I believe I have that, but I wish the IRS had specific authorized hourly rates for use of Computer,  like it does for the vehicle miles ... maybe it will some day. But in the meantime, the Ministry will proceed on the basis of your suggestions above.

                                Thanx again, Jim!

   . The bulk of this Publication originated in August 1996 and was  . UPTD: May 30, 2008  

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