Fee Based Government Official

[rfk]

Please help:

Have a client who is an employee of the State of CA prison system - a chaplain. I am wondering whether expenses incurred out pocket, not reimbursed, would be Form 2106 compliant, flowing to line 24 of the 1040, given all things considered?

I cannot identify exactly what the definition of the term "fee-based" official is with regard to taking this deduction. Can someone shed some light on this?

Thanks.

rfk

[erchess]

Fee Based

If you will see TTB 1040 edition pg 3-5 you will notice that the term fee is not defined. What that tells us is that the word is being used in its everyday sense. If I may be so bold a fee is money you give someone for doing a service for you as opposed to giving you a product and a fee is also not strictly time based. For example, if your chaplain is paid a given sum for each counseling session or worship service or religious education class then he is a fee based government official and may deduct his expenses of providing the relevant services as an adjustment to income. Note that it is not necessary that all of his pay be fee based. For example he could be paid an hourly wage or a salary in addition to extra payments for doing certain things. In that event however his expenses for functions for which he did not receive fees would go on F2106 and end up on Sch A and of course only if he is itemizing his deductions.

[rfk]

Thanks Erchess

Appreciate it!

rfkl

[erchess]

Clarification of time

I should say that I was talking about Fee in the context of payment to an employee. In that context the fee would be a wage if it were for something done for a clocked amount of time. So in the example of your Chaplain if he is paid so much per hour for counseling sessions that's a wage but if he is paid a given sum for sessions that range from say 48 to 55 minutes then he's getting a fee.

And yet in the terms of a fee paid for the services of someone who is not the payer's employee and is practicing a Trade or a Profession the term fee is often strictly time based and clocked to the minute along with perhaps additions for materials use or other costs.

I should also note that as far as I know the fee based government official is the only taxpayer in whose case the taxing agencies care whether a dollar of income was a salary, a wage, or a fee. Nearly all income gets taxed and in certain circumstances there are carefully limited deductions, credits, or adjustments for specified things.

I think the reason these Fee Based Officials get a break most of us don't get is the same reason Clergy get different breaks. There was and is the perception that these are dedicated people who do great social good for relatively little pay compared to the time and effort they put in preparing for and doing their jobs.

[taxxcpa]

Fee-based official

Tax Assessor-Collectors in Texas collect 'fees of office' which probably was income to the Tax A/C originally. There was a fee for assessing and a fee for collecting. However, these fees, at some point, became income to the counties rather than the A/C who was placed on a salary. Years ago the State also had an ad valorem tax which the County Tax A/C assessed and collected. He got a fee for this which reduced the State's share. Many counties made no effort to collect the tax on automobiles, but received a 'fee' for assessing the tax.

In this kind of arrangement he might be called fee-based, but his salary was strictly a salary rather than self-employment.

A Notary Public would be a fee-based public official.

[OtisMozzetti]

Election Inspector

Several years ago, I served as Election Inspector, supervising the operation of a polling place. I was required to pick up and deliver the ballots and other election documents and supplies to the Registrar of Voters.

There was no information document other than an invoice attached to the County's check issued to me for the compensation I received for attending class, for picking up supplies, for setting up the polling place the day before, for serving 6 a.m. to approximately 9 p.m., and for returning the supplies including ballots. I took the vehicle expense for pick up and delivery of the ballots and other election materials as a fee-basis government official adjustment to income. The tax year is already a closed tax year in any event.

The amount of earned income, and the amount of compensation for IRA purposes, that I received was reduced by the small amount of vehicle expense deducted from the compensation received.