Recent cases, like the one involving taxpayer, Duncan Bass, reinforce the significance of understanding and following IRS regulations related to these contributions.
Mr. Bass made a total of 172 trips to Goodwill and the Salvation Army, trying to ensure that each donation receipt remained below the $250 threshold. Unfortunately, he didn’t account for the rules on (a) aggregation of similar items and (b) appraisals.
But before breaking down info about aggregation and appraisal, let’s clarify the $250 rule. If you make a single charitable contribution of $250 or more, you must obtain written acknowledgment from the charitable organization to validate your deduction. This is often referred to as a “contemporaneous written acknowledgment.”
It confirms the amount of cash or describes any property you contributed.
It must indicate whether the charity provided you with any goods or services in return for the gift. If so, it must provide a description and a good faith estimate of the value of those goods or services.
If applicable, it must specify that the only benefit you received was an intangible religious benefit.
If you make multiple smaller gifts to the same charity throughout the year, you’ll need acknowledgment only if any single gift is $250 or more.
Determining fair market value can be the most challenging aspect. The fair market value is not what you originally paid for an item; rather, it’s what it’s worth presently. Numerous reputable resources, such as The Salvation Army and Goodwill, offer donation value guides.
If you claim a deduction of over $5,000 for a non-cash charitable contribution of one item or a group of similar items, you must obtain a qualified appraisal for that item or group of items and attach it to your tax return.
Key point. A “group of similar items” can trigger the appraisal requirement. This is exactly what occurred in Mr. Bass’s case. His 172 trips included clothing donations totaling $13,852 and $11,594 for the two years before the court—very much exceeded the $5,000 appraisal requirement for the group.
]]>With tax season quickly approaching, here are some reminders to help you get prepared.
The Estimated Tax Deadline is January 16, 2024
The IRS says you need to pay estimated quarterly taxes if you expect:
To owe $1,000 or more in federal income taxes this year, even after accounting for your withholding and refundable credits (such as the earned income tax credit).
Here are a few other Hot Topics for this filing season:
The IRS in November delayed a 2023 reporting change for business payments made via apps such as PayPal or Venmo.
If you made energy improvements to your home, you could qualify for tax breaks.
The clean vehicle tax credit caps the break at $7,500
For 2023, the earned income credit ranges from $600 to a maximum of $7,430
The Mileage rates are:
Business 65.5 cents per mile
Medical .22 cents per mile
Charity .14 cents per mile
The tax law changes for this year covered more than 30 pages so these are just a few.
Make sure you are following up with your tax professional to see what changes might apply to your circumstances.
Follow me on Instagram to get the scoop on breaking news and live tips to help take the fear out of this tax filing season.
]]>Are you running a profitable business, or is your business running you out of profits?
I know that filing your taxes can be overwhelming, time-consuming, and scary. It feels like you’ve made money just to give it away. But what if you were able to learn proven tax-saving strategies to lower your tax liability?
These are the same strategies my clients used to save over $118,000 on their taxes last year.
Just imagine how much more confident you'd be knowing that you could keep more of what you earned by deducting the correct personal and business expenses.
Since you're now a part of the Tax Tip Diva (TTD) fam, I got you covered. I’ve been working in the Tax Industry over 25 years and my passion is educating everyone on how to keep more of what they’ve earned.
By organizing their receipts and identifying expenses, many of my clients were able to write off charitable donations, travel expenses, medical expenses and even save money from driving their vehicle.
What I teach my TTD fam (and will soon teach you) can be the difference between owing more money during tax time and receiving a refund.
As you prepare for the upcoming tax season here is your 2023 Close Out Tax Tip:
Business Owners: USE CREDIT CARD - If you are a single-member LLC or sole proprietor filing Schedule C for your business, the day you charge a purchase to your business or personal credit card is the day you deduct the expense. Therefore, as a Schedule C taxpayer, you should consider using your credit card for last-minute purchases of office supplies and other business necessities.
If you operate your business as a corporation, and if the corporation has a credit card in the corporate name, the same rule applies: the date of charge is the date of deduction for the corporation.
But suppose you operate your business as a corporation and are the personal owner of the credit card. In that case, the corporation must reimburse you if you want the corporation to realize the tax deduction, which happens on the reimbursement date. Thus, submit your expense report and have your corporation make its reimbursements to you before midnight on December 31.
Individual Tax Filers: IRA CONVERSION
Think about converting your 401(k) or traditional IRA to a Roth IRA.
Here is the main point to consider: How much tax will you have to pay to convert your existing plan to a Roth IRA? With this answer, you now know how much cash you need on hand to pay the extra taxes caused by the conversion to a Roth IRA.
Stay up to date with all of The Tax Gems Trainings offered by following me on Instagram and Facebook (TikTok coming soon). Also, if there is a topic you want to learn more about contact me (get in my Comments or DM)
]]>
Are you an Educator? If yes, then this Tax Tip is just for you.
"Educator Expense Deduction" If you're an eligible educator, you can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each) of unreimbursed trade or business expenses.
Remind your Tax Professional!
]]>
** Here is an Update regarding Refund Dates. If your refund CONTAINS ANY PORTION from claiming CTC (Child Tax Credit) OR EITC (Earned Income Tax Credit). Here is the information the IRS released:
"The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or debit cards starting February 27, 2019, if these taxpayers chose direct deposit and there are no other issues with their tax return."
Hey Hustlers, Boss Babes, and Biz Kings — If you are due a refund for Past Years taxes, you must file a federal income tax return to get your money.
You typically have a three-year window following the return due date to claim your refund. To claim your refund for the 2015 tax year, your return must be postmarked ON or BEFORE Tax Day, April 15, 2019. File those back tax returns and GET YO $$$.
]]>This is for anyone who has been affected by any of the Natural Disasters over the last couple of years and had to DI into that Retirement fund, please read:
Laws enacted in 2017 and 2018 make it easier for retirement plan participants to access their retirement plan funds to recover from disaster losses incurred in federally declared disaster areas in 2016, 2017 and 2018.
This disaster relief may allow affected taxpayers to:
Let your Tax Professional know if this is you OR Contact me for more information.⠀⠀
]]>As a Business Owner, it can be difficult to know all of the Taxes that apply to you. Often times, you may not be aware of a Tax filing requirement until a notice is received. Here are the most common Tax Filing Requirements applicable to Businesses:⠀⠀⠀⠀⠀⠀⠀⠀⠀
- Income Tax⠀⠀⠀⠀⠀⠀⠀⠀⠀
- Estimated Taxes⠀⠀⠀⠀⠀⠀⠀⠀⠀
- Self Employment Tax⠀⠀⠀⠀⠀⠀⠀⠀⠀
- Employment Taxes⠀⠀⠀⠀⠀⠀⠀⠀⠀
- Excise Tax⠀⠀⠀⠀⠀⠀⠀⠀⠀
The form of business you operate determines what taxes you must pay and how you pay them. Also, depending on your Product & State, additions taxes may be required such as Sales Tax or Use Tax. Does this sound confusing? Is this a topic you would like a Tax Tip Live about? Comment ‘YES’ below!⠀⠀⠀⠀⠀⠀⠀⠀⠀