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Making Charitable Donations this year?
Aug 23, 2010 Tax Strategies 3 Comments
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Have you made a donation to charity this year? Do you plan to make one before December 31? Times are tough but people routinely give money to those with greater needs. The IRS just released more tips regarding a tax deduction on your 2010 personal tax return. Remember the following details:
- Make contributions to qualified organizations. Use IRS Publication 78, Cumulative List of Organizations from the IRS.gov website to point out the best candidates for your good intentions.
- You can only base your deduction on actual (rather than pledged) charitable contributions made by December 31; that is , during the tax year. Credit card charges and check payments are counted in the year they are dated; not when the charges are actually posted.
- Remember that many deductions are only available to taxpayers on IRS Form 1040 Schedule A. You have to itemize many deductions rather than take them as part of the standard deduction to reduce your taxable income.
- Though special rules apply for some donated property categories, you can typically deduct cash contributions and a property’s fair market value from your taxable income. Determine the eligibility of each contribution case by case.
- You can only calculate deductions for the value of your contribution that is IN EXCESS of the benefits you receive (tickets to a sports event, admission to a dinner, or fair market value of an object). Keep records of the contribution regardless of the amount of the deduction.
- Any contribution over $249 must have additional documentation such as written acknowledgment or receipt by the group or organization receiving your donation. These records must include the date, the exact amount, and description of the donation. If you make charitable donations over $499 you are required to complete IRS Form 8283, Noncash Charitable Contributions and attach it to your tax return. A written appraisal AND completion of Section B of the form are required for donations over $5,000. Organize your financial records.
More questions? Visit the IRS website, IRS.gov and download IRS Pub 526, Charitable Contributions or call the agency at 800-TAX-FORM (800-829-3676) for additional tax information.
Changing Tax Preparer Procedures and Fees
Aug 19, 2010 Tax Changes 1 Comment
The Internal Revenue Service (IRS) has announced new filing procedures, fees and regulations for people who prepare tax returns for compensation. Any person who is paid to prepare part or all of an income tax return or claim for tax refund after December 31, 2010 must complete an application and file for a Preparer Tax Identification Number (PTIN). These special “Social Security Numbers” are assigned by the IRS and appear on tax returns completed by the tax preparer. They provide personal identity protection to the tax preparer and now greater quality assurance to both the IRS and consumer.
Compensated tax preparers will have to pay a $64.25 service fee for the PTIN. These charges include $50 according to the IRS “per user to pay for outreach, technology, and compliance efforts associated with the new program.” The additional $14.25 is charged by third-parties for operation of an “online system” and customer support. Tax preparers in the past have accessed “preparer services” through IRS.gov online for free. Proposed procedures changes and signup apply to all tax preparers of federal tax returns; whether new in 2010 or previous PTIN holders. The new regulations require that these compensated preparers annually renew their PTIN and obviously pay any associated fees… in addition to their personal income taxes on preparation fees! No discount for working for the Feds! Fortunately, the online application system will be accessible through the same Tax Professional page on IRS.gov. Tax code is confusing enough, the Feds don’t want to make this new “improved” application process for the compensated tax preparer too complicated…
It is important to note that the existing PTIN application process, using either e-services or IRS Form W-7P, Application for Preparer Tax Identification Number, will cease operations effective August 22, 2010. The message on the webpage for the form tells you so!!! Happy Tax Season…
