This is a question/suggestion. I was not able to come in at all in 2022 and considered cancelling but didn’t want to go through the reactivation process because the initial activation was quite involved. As far as I know, there is no mechanism to convert an unused membership to a donation, but is that a possibility? I think it would motivate more people to keep the membership, and DMS would collect more donations. If this is possible, can it also be retroactive? Thank you
Probably the vast majority of active members rarely step foot in the space. Whether you personally use the membership time is largely irrelevant. It is just part of the space income that keeps the lights on. You can certainly think of it as a donation, but if you’re hoping to garner a tax writeoff as a charitable donation, that won’t happen.
Think of it like a health club membership. Lots of people obtain memberships at the beginning of the year, with big plans to make regular exercise part of their lifestyle. Then, more interesting activities draw their interest away. Or the reality of the drudgery that exercise can be when you really don’t like it kicks in. And they stop going. If they don’t go through the process of cancelling the membership, they continue to have membership drafted from their account.
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First off, if you don’t use the membership money paid, it is basically a “donation” of sorts. The issue between Dues and Donation are accounting and IRS issues.
I would submit that during the long period of DMS’s Covid shut down the over 1,100 members that kept paying their dues were really “donations” because we knew we couldn’t use DMS but wanted to make sure it existed for when the facility opened up. We supported the IDEA of DMS. Personally, that is why I maintained my dues. Some may say “If you were on legacy rate you’d give that up and be subject to the new rates.” While that may be true technically, if I’d stopped paying dues for 12-18 months, it would take 3 - 5 years to make up the difference. That’s a long time. Some people for financial reasons needed to stop paying - there was a lot of hardship.
Memberships are not donations and are not deductible because there is a quid pro quo: dues get you something in exchange: access and use of the facilities, whether you use those facilities isn’t relevant, you had the right to it.
You can set up monthly contributions to DMS that are pure donations and these are tax deductible. See home page under Contributions. But they entitle you to nothing - they are gifts to DMS and DMS is a 501(c)(3) Non-profit so those contributions are deductible under IRA rules.
There is also the issue of the discounted Dues. It is meant for 12 months, so if you cut it off and reassign, then if properly accounted for, you’d have to recompute the full dues rate, update the accounting, then only credit what was leftover.
As for “Unused Annual Payment” being converted. I doubt this will ever happen and it has a lot to do with accounting practices. DMS basically works on Cash basis not and Accrual basis. That means DMS books the income as it is received. So accounting would have to reverse out part of the payment and reclassify it. This becomes even more of a problem if it crosses a calendar year because then it would require amending the prior year’s tax return.
It would be nice if it were a practical thing to do, but it really isn’t. What looks simple isn’t because we have to maintain accounting practices to GAAP and IRS requirements. But know that the money you’ve paid has and is supporting the DMS mission. I really hope you have the opportunity to take advantage of DMS, that’s a Win-WIN for both DMS and You.
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Really appreciate the info. This is what I was wondering. My thought was that since a donation option exists already, accounting methods are already set up for both payment for service and donation. And perhaps it’s a matter of website user interface design change in which a “convert” action would automatically suspend (without cancelling) the membership and the monthly dues would continue to be drafted into the donation bucket. I understand this would also require a deactivation of the key fob while the membership is suspended, and I don’t know how complicated this may be.
I also did not know the membership price has increased, so good to know.
Anyway, thank you for the insight.
You might check your donation statement. If you’re receiving a benefit, that benefit is not deductible. Now, there are 2 possibilities: touring the facilities costs DMA nothing, so your privileges may qualify as fully deductible. DMS, OTOH, has expenses associated with your use of tools, so we consider none of your membership deductible.
If there’s any weirdness with the way the DMA assesses the deductibility of your membership, the IRS probably hasn’t pursued it. The totality of your membership fee is probably in the zone that the IRS considers “chump change” – your actual benefit on your tax return is probably pretty minimal.
Wait, I was supposed to step foot in DMS? LOL, I’m always too busy, but been paying for many many years. I plan to make more appearances the coming years.
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With up to 87 thousand new employees, there may be more scrutiny.
They have to be able to find people to hire. They were significantly short-handed last year. They didn’t have anybody answering the Practioner Line!!
They may have those new positions but I wonder how many are already unfilled.
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One side claims improved service while the other says more audits of the middle class.
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They will have the best service now!
Wait, what is considered good service from the IRS? Why do we want every movement of money $600 and greater directly reported to the IRS?
[spoilers] Shakes head like echa-sketch [/spoilers]
Repeats narrative.
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The IRS has never had the funding to adequately track all the 1099-MISC (now 1099-NEC) that they receive.
I moved to Colorado in 2020, but have maintained my DMS membership, even though I only come there a few times a year.
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