An unusual tax deduction

I just realized it has been 10 days since my last blog post. It's amazing how quickly life sucks the time right off the clock, leaving me little to pursue what I love -- riding and writing about horses.

Very few people can make a living with their horses, and unfortunately I'm not one of them. Not everyone is as lucky as Jerry and Ann Moss, owners of the beautiful race mare, Zenyatta, who earned them millions of dollars on the track and is now two months from delivering a valuable foal that may follow in Lady Z's footsteps. (I wonder if they'd like to adopt me?)

No, for most of us, our horses do not provide cash inflow to put on our tax returns; they require cash outflow that does not USUALLY get deducted on our tax returns. Unless you're a mounted posse member.

I should know. The Suburban Cowgirl is an accountant and tax preparer and a member of a posse.

This will be an interesting tax return for me this year. I joined the Gila County Sheriff's Mounted Posse the end of 2010 and spent a lot of time and money in 2011 taking classes, going to training events, and keeping my posse horses in condition in case we were called out to a search. And, of course, actually spending three days pushing through manzanita on a search last September.

I made the decision to keep Dawn as a posse horse instead of trying to sell her, as I had been planning to do. That decision turned her into a tax deduction for me.

There are certain requirements for me to be able to deduct Dawn's expenses on my Schedule A as a charity donation. First, the work I did with the horse has to be on behalf of a 501c3 organization, which the Gila County Sheriff's department is. Second, I need to get a letter of acknowledgment from that organization stating what services I provided. With those two conditions met, I can write off the expenses of maintaining and caring for my posse horse, in addition to unreimbursed expenses driving to training or rescue events and costs of first aid courses, rescue gear and first aid gear, and other expenses incurred in this pursuit.

Generally, the basic care and maintenance of a horse is going to be in the range of $1500 a year (if you have a place to keep it -- add $100 a month if it's boarded out). That will become part of my Itemized deductions, so if my mortgage interest and property taxes are high enough it will put me over the Standard deduction.

This isn't quite the windfall it looks like. My other itemized deductions are about $5000, so normally I would take the Standard Deduction instead. With my standard deduction being $5800 this year, the posse deduction will put me over that but will yield a reduction in taxable income of only $700 ($5000+1500-5800). In the 15% tax bracket, that will save me a whopping $105 in taxes, a far cry from the $1500 I will have spent to get that refund.

But that $105 will buy ... is it 5 or 10 bales of hay? Depends if I buy them this month or the middle of next summer ... IF the price of hay goes back down. Either way, it's better than paying the $1500 and NOT getting 5 or 10 bales of hay in return.

Even if I doubled the deduction to $3000 with trailer repairs and other things, that only yields another $225 in tax relief.

So the deduction helps, but that's not the reason I participate in the posse; I would do it even if it wasn't deductible. I am compelled to try to help people, and using my horses to help others helps mitigate the guilt of enjoying them. (It just seems so unfair that I have this wonderful life and others don't.)

I will write off Dawn's expenses, and save the $100 or 200 in taxes, and not feel guilty about that at all. Having a team of people willing to drop what they are doing, load up horses and drive into the wilderness to find a lost child, or rescue an injured hiker, or find an overdue hunter who might have had a heart attack is important to the community and a tremendous resource for the sheriff's department. If there were no search and rescue volunteers, the sheriff's department would have to send paid deputies to do this work, at taxpayer expense. (Can you spell O-V-E-R-T-I-M-E?)

One deputy standing in for me for just one of the days I searched last year would cost the public far more than the little bit of tax relief I get.

It's probably one of the most lucrative "bang for the buck" any tax deduction yields to this country.

I shall write off Dawn's expenses as a patriotic duty ...

... in October. I'll be too busy doing other people's taxes to do my own in April so I'll be filing an extension again.

And that's the latest from the Ranch.