Tax Information
Division of Volunteer Services

LOSAP Program outline

The Length of Service Award Program (LOSAP) is a Montgomery County funded and administered program that awards volunteers for their service. The system is based on the accumulation of certified, active years of service in which the volunteer received 50 or more LOSAP points in a calendar year. Volunteers can earn points in categories such as:

• Meetings
• Drills
• Calls run
• Collateral duties
• Stand-bys
• Appointed/Elected positions
• Awarded for the completion of training classes

Volunteers who earn less than 50 points in a year are considered “participating,” volunteers who earn 50 or more points are considered “active.” For example, it is possible for a volunteer to have 20 years of service at a department, but only 12 years of certified LOSAP years of service.

LOSAP Award Payments

Volunteers who reach 25 years of service, or 10 years of service and 65 years of age, or 15 years of service and 60 years of age, are eligible to receive a monthly LOSAP Award payment from Montgomery County. These award payments are not wages or a pension. They are classified simply as an award payment. There is no tax withholding for these payments, they are direct deposited, and recipients receive a 1099 form at the end of the year.

LOSAP Award payments are exempt from Maryland taxes. As with any 1099 you may receive, they must be added to your gross income. However, the 1099 amount can then be entered on line 13 of form 502SU and attached to your state tax form 502, effectively removing them from your gross income. Enter the amount of your 1099 on line “n.” Follow these instructions (PDF) to do this.

Section 21-21 of the Montgomery County code references these payments.

The Nominal Fee

What we refer to as “the nominal fee” is an annual stipend paid to volunteers who were LOSAP Active (earned 50 points or more) in the previous year, and who were a member of a department for at least six months of that year. The amount varies and is dependent on action by the Montgomery County Council. There are two levels of the nominal fee: a “high” amount and a “low” amount. Volunteers qualify for the low amount if they were LOSAP Active (as defined above) the previous calendar year. Volunteers qualify for the high amount if they were:

• on the IECS list
• received 30 points for calls, and
• received 20 points for sleep-ins or stand-bys

The nominal fee is considered a “wage” and is issued via check by the county and mailed to volunteers. Article 12 of the Montgomery County Volunteer Fire Rescue Association agreement (PDF) references these payments.

Section 139B of the Internal Revenue code (PDF) allows an exemption for qualified payments to firefighters/rescue volunteers up to $600. In an opinion letter from the IRS, they instructed Montgomery County not to withhold taxes for any payment below the threshold, nor to issue a W2 for any payments under the threshold. Further, volunteers are not to enter payments up to the threshold on their gross wages. We encourage you to provide a copy of this opinion letter (PDF) to your tax preparer.

Payments received in excess of the threshold would need to be reported, withholding would be taken out by the county, and a W2 issued.

Maryland Tax Incentive

Volunteers who are LOSAP Active (earned 50 points or more) in the previous three years, and have been a member for 36 months, may receive a Maryland State income tax credit. The amount of the exemption is dependent on action by the Maryland State Legislature. The form for this credit will be included in the documents your station provides you when LOSAP totals have been finalized (usually in February of each year). You should include a copy of the form to your tax preparer.

To enter the credit on your Maryland State taxes, you will need to submit form 502SU (PDF). The credit gets entered on line “va.” Attach your tax incentive form as well.

Montgomery County Property Tax Credit

Volunteers who qualify for the nominal fee (above) may qualify for a property tax credit if they own and reside in a residential property in Montgomery County. In March of each year, an online form will be made available to apply for the credit. The form, by law, must be completed by April 1. The form is managed by the Montgomery County Treasury Department.

If you wish to check the status of your credit, please visit the Real Property Tax site and search for your property. The tax bill should show a $2,500 deduction (NOTE: if your property tax bill is less than $2,500, the credit will show a lower amount) if you qualified.