Volunteer Firefighters & EMT Income

[Zee]

The Mortgage Forgiveness Debt Relief Act appears to include language that excludes volunteer firefighters income for federal taxation starting in 2008. Is that correct? Who would expect to find that in a Mortgage Foregiveness Act? I didn't know that, but I don't have any clients in this category. Those that have probably already know. Anyway, here's a link...

http://www.taxformprocessing.com/tax/download/tax-acts/2007-MFDRA.pdf

[BOB W]

Just reading it quickly, it appears that it only applies to "Benefits"..............not being included in income...???

[Zee]

Just reading it quickly, it appears that it only applies to "Benefits"..............not being included in income...???

The language isn't very clear. It's interesting that the H&R Block website on recent tax law changes indicates the "compensation" is exempt from federal taxes, that's different than "benefits".

http://www.hrblock.com/taxes/tax_tips/tax_law_changes/legislation_summary_2007.html

[taxmandan]

The language isn't very clear. It's interesting that the H&R Block website on recent tax law changes indicates the "compensation" is exempt from federal taxes, that's different than "benefits".

http://www.hrblock.com/taxes/tax_tip...mary_2007.html

'Volunteer' means they don't get paid, so there are no wages to exclude from taxation. But some volunteers get other non-cash benefits, like a reduction in some local/state taxes and free donuts at the fire station while training or on standby for calls. Sounds like Congress doesn't want theIRS to require tax paid on these fringe benefits.

[Gene V]

From WebCD

Volunteer Firefighters and Emergency Medical Responders

For tax years beginning after 2007 and before 2011, the law provides new benefits for
volunteer firefights and emergency medical responders. Under Section 139B, the
following benefits are excluded from gross income:
• Any qualified state and local tax benefit provided to a member of a qualified
volunteer emergency response organization.

• Any qualified payment to a member of a qualified volunteer emergency response
organization.
Qualified state and local tax benefit. This term means any reduction or rebate of one of
the following taxes that is provided by a state or political division on account of services
performed as a member of a qualified volunteer emergency response organization:

• State and local, and foreign, real property taxes,
• State and local personal property taxes, or
• State and local, and foreign, income, war profits, and excess profits taxes.

Qualified payment. This term means any payment (whether in the form of a
reimbursement or otherwise) that is provided to the taxpayer by a state or political
division on account of the performance of services as a member of a qualified volunteer
emergency response organization. Qualified payments are limited to up to $30 per month
in which the taxpayer performs the services.

Qualified volunteer emergency response organization. This term means any volunteer
organization under contract to provide firefighting or emergency medical services for
persons in the state or political subdivision.
Denial of double benefit. Expenses that are otherwise deductible by the taxpayer are
allowed to the extent they exceed the amount that is excluded from gross income.

[Zee]

'Volunteer' means they don't get paid, so there are no wages to exclude from taxation. But some volunteers get other non-cash benefits, like a reduction in some local/state taxes and free donuts at the fire station while training or on standby for calls. Sounds like Congress doesn't want theIRS to require tax paid on these fringe benefits.

I don't think that's true of all "volunteer" fire departments. I think some receive small payments based on calls, etc. In fact, I got interested in this after reading a post asking about mileage for a volunteer fireman that had received a W2.

The act (s summarized in a later post here) appears to indicate up to $360 of such qualified payments are non-taxable.

[thomtax]

Volunteer Firemen do get paid

While they may not be paid in some parts of the country, in our part of Arkansas, unless you are in a large city, most of the firefighters are volunteers. For instance, in my town, there are 4 paid firemen, so that there is always someone on duty. All the rest of the firemen are volunteers, which means that they are not required to respond to a fire but do so voluntarily. They are paid a specific amount for each fire that they voluntarily respond to.

LT

[Zee]

While they may not be paid in some parts of the country, in our part of Arkansas, unless you are in a large city, most of the firefighters are volunteers. For instance, in my town, there are 4 paid firemen, so that there is always someone on duty. All the rest of the firemen are volunteers, which means that they are not required to respond to a fire but do so voluntarily. They are paid a specific amount for each fire that they voluntarily respond to.

LT

That's probably so. The term "volunteer" doesn't necessarily mean people aren't paid in lots of situations. Museum staff's sometimes have both paid & unpaid volunteers. We have a volunteer army, but they're paid.

In the small town I lived in many years ago, our volunteer fireman were paid a small amount and also received a small cash pension after retiring.

[steve1245]

Compensation

I have a couple of clients who are volunteers and receive about $2000 per year compensation. Does any one know how we are to deduct the $360 as they receive a W-2 for there services should the amount not already be deducted?

[newbie]

See page 20 of publication 15b - http://www.irs.gov/pub/irs-pdf/p15b.pdf

It is not suppose to be included in the W-2. It is a maximum of $30 per month (12 months X $30 = $360) so every volunteer will not qualify for the max $360 if not involved for all 12 months. If the city/township is not aware of this and includes it in the W-2 I would do a subtraction on line 21.

We have a volunteer fire department that is reimbursed per fire call to reimburse for mileage and/or other necessary expenses. In this case a fireman could receive $90 in one month and nothing the next so would not qualify for the $30 in the month they receive nothing, but only $30 in the month they received more.

Even though they are paid per firecall, they are true volunteers as they spend a lot of time but are only paid if they actually go a fire. They each have duties to maintain the equipment and trucks, check the local businesses to be sure they are up to code and safety programs for the schools, etc....

Another link for information from IRS:

http://www.irs.gov/govt/fslg/article/0,,id=184221,00.html