Well, thanks for all the thought on the subject. I have one of those ugly 1040s with itemized deductions and will be starting it next month. I will definitely take all of these things into account and discuss them with my accountant when we sit down.
I prepare tax returns for low income people on a volunteer basis, with a VITA organization. It's unlikely that a client would ask to claim a charitable deduction for a race, because the client base isn't much into organized running. However, if a client did ask to do this, I'd cite the requirement that only the excess over fair value can be claimed; discuss the fuzziness of "fair value" unless the race organizer is willing to quote you a number; and remind the client that in the event of an audit, he or she would need to produce receipts to support any charitable contribution. I would not demand to see a receipt; I'd take the client's word that such a receipt exists in their records.
However, I would not claim a deduction for a charitable race on my own return. The issues I have with this are, getting a receipt (possible, but I haven't bother to keep them); estimating fair value received (I'd look for a comparable non-charity event, and take the difference in entry fees; but I don't know how secure that would be if challenged); and materiality.
Materiality: The major charity race I might enter is the 3.5 mile Chase Corporate Challenge. The entry fee is $30. I can enter a non-charity 5K for $10, without a T shirt. Chase gives me a shirt. So say the charity portion is $15. I'm in the 25% federal tax bracket, and can't itemize for NY taxes. That $15 would give me a 30% chance of reducing my federal tax bill by $12 or $13, and a 70% chance of having no impact. This is simply not worth my time. If I were running 10 charity events a year, $150 of itemized deductions would get me $37 or $38 off my tax bill; but that many races claimed would be more of an attention-grabber for a potential audit and that much more hassle to support the charitable portion.
But that's just me. The fact that I need a receipt to claim a charitable contribution deduction does not keep me from tossing a buck into a Salvation Army kettle, or from donating canned goods to a food cupboard weekly at church. Yes, the canned goods would add up to enough to see on the tax bill; but keeping records that demonstrate they were purchased for charity is more trouble than it's worth to me.
Others may look at the same facts and find that the effort needed to support the deduction is worth their time. Others may feel that the chance of audit is low enough that it is worth the risk. That's fine.
"Discipline is remembering what you want. " - David Campbell
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Yes some of the fee can be deductible if the race benefits a charity. But I would be very careful with this. You do have to take out the value of any goods you receive from the race, such as a t-shirt. And then there are the race series that support charities, but not a dime of your registration fee goes to the charities (think big race series).
If you do events like MS rides/walks, in some cases, charitable organizations that coordinate these events will tell you the donation value to declare.
TIMOTHYNOHE said "It can even be argued that the very running of the race itself could be considered something of value that you receive." Please cite the IRS regulation that supports your argument.
TIMOTHYNOHE also said "may ultimately not be worth the effort due to the red flags it raises." First, asking the RD requires nothing more than an email. Second, it raises no more red flags than any other charitable contribution. You get written evidence of your contribution and its deductibility - same as for any other contribution.
She(WMBO) CPA, MBA has told me approximately an intersection of what Pastafarian and Coach Nancy's revenuer husband have said. The entire fee is not deductible because of shirts, medals, etc, and all the costs of running the race. While it may be advisable to check with the race director for what percentage is deductible, it may ultimately not be worth the effort due to the red flags it raises. It can even be argued that the very running of the race itself could be considered something of value that you receive.
It's may simply not be worth the effort in the final analysis.
Start by doing what is necessary, then do what is possible and suddenly you will be doing the impossible -- St Francis of Assisi
Coach Nancy, I would not follow your husband's advice. That t-shirt or medal you think you paid for may have been paid for by a sponsor. (And I've been in races where I know the bling has been donated.) Conversely, part of your registration fee may have paid for office supplies, utility bills, etc. - expenses that you cannot possibly guess at.
Ask your husband to provide a reference to the IRS regulation that says you can compute race fee deductions as you say.
I maintain that the correct way is to get the figure from the race director.
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Ummm, you may want to verify that--my hubby who works for the IRS--says what ABSOLUTZERO and Jeckie mentioned--if you receive any t-shirt, medal or other swag you must deduct that from your contribution--and as Jeckie mentioned it could raise a red flag--my take--Donate for the race--
If you really want to pursue this (and I do), email the race director and ask how much of the race is deductible. Typically, I have to wait until after the race and after all the accounts are settled. Then the RD can send me an email noting how much is deductible. I'll print the email and keep it in my tax file in case of an audit.
Um, so this isn't entirely true (despite what HR Block might try to say).
You can deduct anything over and above the value you are getting (per IRS Publication 526). The "value" of the race would include the opportunity itself, medals, t-shirts, etc. So... it's rather challenging to actually come up with the charitable value of the race. Ideally they would tell you at the race, but that rarely happens.
Personally, proving the values wouldn't be worth the risk to me.
Signed, Your friendly neighborhood accountant
Jeckie (aka. Sarah) - Lowell, MA - EST Half Fanatic #3032
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