Thursday, December 15, 2011
Mantyla McReynolds Among Top 25 Best Companies to Work For
Yesterday Kim McReynolds accepted the award at Utah Business Magazine's Best Companies Event at Little America.
Friday, December 9, 2011
IRS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in July
WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.
Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations
The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.
Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
Thursday, November 17, 2011
Social Security and Medicare Figures for 2012
COLA will be paid in 2012; Medicare costs rise less than predicted
If you receive Social Security or SSI benefits, here's some good news--the Social Security Administration has announced that for the first time since 2009, a cost-of-living adjustment (COLA) will be paid. Monthly benefits will increase 3.6% starting in January 2012 for Social Security beneficiaries and starting on December 30, 2011, for SSI recipients. According to the Social Security Administration, the average increase in monthly benefits will be approximately $43.
If you're covered by Medicare, you won't be seeing a large premium increase next year. Despite media reports predicting that the COLA increase would be offset by higher Medicare Part B premiums, the Centers for Medicare & Medicaid Services (CMS) has announced that the standard monthly Medicare Part B premium will be $99.90 in 2012, $15.50 less than in 2011. However, because the premium for most Medicare beneficiaries has been frozen for the past three years at $96.40 (the premium rate in 2008), most beneficiaries will pay $3.50 more per month in 2012. Beneficiaries with higher incomes (individuals with taxable incomes of more than $85,000 and couples with taxable incomes of more than $170,000) will pay more than $99.90 per month because they must pay an income-related surcharge.
While costs vary, the average monthly premium for a Medicare Part D prescription drug plan in 2012 is estimated at around $30, approximately the same as in 2011. And Medicare Advantage premiums will be 4% lower, on average, in 2012 than in 2011, according to CMS.
Other important Social Security figures
The amount of taxable earnings subject to the Social Security tax (called the maximum taxable earnings limit) will increase to $110,100 from $106,800 in 2011.
The retirement earnings test exempt amount for beneficiaries under full retirement age will increase to $14,640 per year from $14,160 per year in 2011. If earnings exceed this amount, $1 in benefits will be withheld for every $2 in earnings above this limit.
The retirement earnings test exempt amount that applies during the year a beneficiary reaches full retirement age will increase to $38,880 from $37,680 per year in 2011. If earnings exceed this amount, $1 will be withheld for every $3 in earnings above this limit.
The amount of earnings needed to earn one Social Security credit will increase to $1,130 from $1,120.
Note also that the OASDI payroll tax that was reduced by 2% for wages and salaries paid in 2011 and for self-employment income in 2011 will revert to its normal rate of 6.2% for 2012.
Other important Medicare figures
The Medicare Part B deductible will be $140, down from $162 in 2011.
The monthly Medicare Part A premium for those with fewer than 30 quarters of coverage will be $451, up from $450 in 2011 (most people do not pay a premium for Medicare Part A).
The monthly Medicare Part A premium for those who have between 30 and 39 quarters of coverage will be $248, the same as in 2011.
The Medicare Part A deductible for inpatient hospitalization will be $1,156, up from $1,132 in 2011. Beneficiaries will pay an additional $289 per day for days 61 through 90, up from $283 in 2011, and $578 per day for stays beyond 90 days, up from $566 in 2011.
Beneficiaries in skilled nursing facilities will pay a daily co-insurance amount of $144.50 for days 21 through 100 in a benefit period, up from $141.50 in 2011.
Information provided by Broadridge Investor Communications Solutions, Inc. IMPORTANT DISCLOSURES - Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable--we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
If you receive Social Security or SSI benefits, here's some good news--the Social Security Administration has announced that for the first time since 2009, a cost-of-living adjustment (COLA) will be paid. Monthly benefits will increase 3.6% starting in January 2012 for Social Security beneficiaries and starting on December 30, 2011, for SSI recipients. According to the Social Security Administration, the average increase in monthly benefits will be approximately $43.
If you're covered by Medicare, you won't be seeing a large premium increase next year. Despite media reports predicting that the COLA increase would be offset by higher Medicare Part B premiums, the Centers for Medicare & Medicaid Services (CMS) has announced that the standard monthly Medicare Part B premium will be $99.90 in 2012, $15.50 less than in 2011. However, because the premium for most Medicare beneficiaries has been frozen for the past three years at $96.40 (the premium rate in 2008), most beneficiaries will pay $3.50 more per month in 2012. Beneficiaries with higher incomes (individuals with taxable incomes of more than $85,000 and couples with taxable incomes of more than $170,000) will pay more than $99.90 per month because they must pay an income-related surcharge.
While costs vary, the average monthly premium for a Medicare Part D prescription drug plan in 2012 is estimated at around $30, approximately the same as in 2011. And Medicare Advantage premiums will be 4% lower, on average, in 2012 than in 2011, according to CMS.
Other important Social Security figures
The amount of taxable earnings subject to the Social Security tax (called the maximum taxable earnings limit) will increase to $110,100 from $106,800 in 2011.
The retirement earnings test exempt amount for beneficiaries under full retirement age will increase to $14,640 per year from $14,160 per year in 2011. If earnings exceed this amount, $1 in benefits will be withheld for every $2 in earnings above this limit.
The retirement earnings test exempt amount that applies during the year a beneficiary reaches full retirement age will increase to $38,880 from $37,680 per year in 2011. If earnings exceed this amount, $1 will be withheld for every $3 in earnings above this limit.
The amount of earnings needed to earn one Social Security credit will increase to $1,130 from $1,120.
Note also that the OASDI payroll tax that was reduced by 2% for wages and salaries paid in 2011 and for self-employment income in 2011 will revert to its normal rate of 6.2% for 2012.
Other important Medicare figures
The Medicare Part B deductible will be $140, down from $162 in 2011.
The monthly Medicare Part A premium for those with fewer than 30 quarters of coverage will be $451, up from $450 in 2011 (most people do not pay a premium for Medicare Part A).
The monthly Medicare Part A premium for those who have between 30 and 39 quarters of coverage will be $248, the same as in 2011.
The Medicare Part A deductible for inpatient hospitalization will be $1,156, up from $1,132 in 2011. Beneficiaries will pay an additional $289 per day for days 61 through 90, up from $283 in 2011, and $578 per day for stays beyond 90 days, up from $566 in 2011.
Beneficiaries in skilled nursing facilities will pay a daily co-insurance amount of $144.50 for days 21 through 100 in a benefit period, up from $141.50 in 2011.
Information provided by Broadridge Investor Communications Solutions, Inc. IMPORTANT DISCLOSURES - Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable--we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Wednesday, October 26, 2011
New Guidance for Cell Phones and Other Tax Updates
The following is a summary of the most important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Personal use of employer-provided cell phones generally nontaxable under new guidance. Close to one year after cell phones were removed from the “listed property” category of Code Sec. 280F , the IRS has explained the practical consequences of the change. In sum, where an employer provides employees with cell phones primarily for noncompensatory business reasons, neither the business nor personal use of the phone results in income to the employee, and no recordkeeping of usage is required. And, in most instances, an employer's reimbursement to employees for their providing a cell phone for bona fide employment-related business use won't be taxable. The guidance applies for all tax years after Dec. 31, 2009.
Simplified per-diem rates increase slightly for post-Sept. 30 business travel. An employer may pay a per-diem amount to an employee on business-travel status instead of reimbursing actual substantiated expenses for away-from-home lodging, meal and incidental expenses (M&IE). If the rate paid doesn't exceed IRS-approved maximums, and the employee provides simplified substantiation, the reimbursement isn't subject to income- or payroll-tax withholding and isn't reported on the employee's Form W-2. In general, the IRS-approved per-diem maximum is the GSA per-diem rate paid by the federal government to its workers on travel status. This rate varies from locality to locality. Instead of using actual per-diems, employers may use a simplified “high-low” per-diem, under which there is one uniform per-diem rate for all “high-cost” areas within the continental U.S. (CONUS), and another per-diem rate for all other areas within CONUS. The IRS has issued a new notice carrying the “high-low” simplified per-diem rates for post-Sept. 30, 2011 travel. The high-cost area per-diem increases by $9 to $242, and the low-cost area per-diem increases by $3 to $163. The IRS also has issued a revenue procedure providing rules for using per diem rates to substantiate the amount of ordinary and necessary business expenses paid or incurred while traveling away from home.
Guidance on electing zero estate tax for 2010 decedents. Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, estates of decedents who died in 2010 can choose zero estate tax, but at the price of beneficiaries being limited to the decedents' basis plus certain increases under Code Sec. 1022 . In early August, the IRS issued detailed guidance on how this election is made. The guidance revealed that the election is made by filing a Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Specifically, Form 8939 is an information return used by the executor of a decedent who died in 2010: (1) to make the Section 1022 Election; (2) to report information about property acquired from a decedent; and (3) to allocate Basis Increase to certain property acquired from a decedent. In general, Form 8939 is due by Jan. 17, 2012.
Time for executors to make portability election for 2011 decedents. In a new notice and accompanying news release, the IRS reminded executors of the estates of married decedents dying after 2010 that they must file an estate tax return in order to pass along the unused estate and gift tax exclusion amount, available for the first time this year, to their surviving spouse. The first estate tax returns for estates eligible to make the portability election started becoming due on Oct. 3, 2011 (i.e., nine months after a post-2010 date of death). Because the IRS believes that most married couples will want the surviving spouse to be able to take advantage of the unused exclusion amount of the first spouse to die, the election is deemed made if a Form 706 (estate tax return) is properly and timely filed. No affirmative statement or other indication is necessary. Even if the estate isn't required to file a Form 706 (e.g., because the value of the gross estate is less than the exclusion amount), the Form 706 must be filed in ordered to make the election. For estates that choose not to make a portability election, if that estate is otherwise required to file a Form 706, the executor must follow the instructions for Form 706 describing the necessary steps to avoid making the election. For estates that aren't required to file a Form 706, simply not filing the form will effectively prevent the making of the election.
Foreign financial assets disclosure. For tax years beginning after Mar. 18, 2010, the Hiring Incentives to Restore Employment Act of 2010 provides that individuals with an interest in a “specified foreign financial asset” during the tax year must attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets is greater than $50,000 (or a dollar amount higher than $50,000 as the IRS may prescribe). “Specified foreign financial assets” are: (1) depository or custodial accounts at foreign financial institutions, and (2) to the extent not held in an account at a financial institution, (a) stocks or securities issued by foreign persons, (b) any other financial instrument or contract held for investment that is issued by or has a counterparty that is not a U.S. person, and (c) any interest in a foreign entity. Disclosure is made by filing Form 8938 (Statement of Specified Foreign Financial Assets) with the taxpayer's appropriate return (e.g., with Form 1040 in the case of an individual). In September, the IRS released a draft version of the 2011 Instructions to Form 8938. The instructions indicate that under a transitional rule, most taxpayers won't have to file the form until 2012.
Equitable innocent spouse relief eased. Married joint return filers are jointly and severally liable for the tax arising from their returns. Innocent spouses may request relief from this liability in certain circumstances. Previously, the IRS took the position that a request for equitable innocent spouse relief had to be made no later than two years from the first collection activity against the spouse. After being pressured by legislators and the National Taxpayer Advocate, the IRS has now eliminated the two-year period for equitable relief. Elimination of the two-year period is reflected on Form 8857, which is used to request innocent spouse relief.
Supreme Court to decide whether basis overstatements can trigger six-year limitations period. Late last year, the IRS issued final regulations under which an understated amount of gross income reported on a return resulting from an overstatement of unrecovered cost or other basis is an omission of gross income for purposes of the six-year period for assessing tax and the minimum period for assessment of tax attributable to partnership items. The six-year limitations period applies when a taxpayer omits from gross income an amount that's greater than 25% of the amount of gross income stated in the return. Several courts had held that a basis overstatement is not an omission of gross income for this purpose. In response to these decisions, the IRS issued the new regulations to clarify that an omission can arise in that fashion. However, some courts have upheld the regulations and others have rejected them. As a result, the Supreme Court has now decided to resolve the dispute.
Personal use of employer-provided cell phones generally nontaxable under new guidance. Close to one year after cell phones were removed from the “listed property” category of Code Sec. 280F , the IRS has explained the practical consequences of the change. In sum, where an employer provides employees with cell phones primarily for noncompensatory business reasons, neither the business nor personal use of the phone results in income to the employee, and no recordkeeping of usage is required. And, in most instances, an employer's reimbursement to employees for their providing a cell phone for bona fide employment-related business use won't be taxable. The guidance applies for all tax years after Dec. 31, 2009.
Simplified per-diem rates increase slightly for post-Sept. 30 business travel. An employer may pay a per-diem amount to an employee on business-travel status instead of reimbursing actual substantiated expenses for away-from-home lodging, meal and incidental expenses (M&IE). If the rate paid doesn't exceed IRS-approved maximums, and the employee provides simplified substantiation, the reimbursement isn't subject to income- or payroll-tax withholding and isn't reported on the employee's Form W-2. In general, the IRS-approved per-diem maximum is the GSA per-diem rate paid by the federal government to its workers on travel status. This rate varies from locality to locality. Instead of using actual per-diems, employers may use a simplified “high-low” per-diem, under which there is one uniform per-diem rate for all “high-cost” areas within the continental U.S. (CONUS), and another per-diem rate for all other areas within CONUS. The IRS has issued a new notice carrying the “high-low” simplified per-diem rates for post-Sept. 30, 2011 travel. The high-cost area per-diem increases by $9 to $242, and the low-cost area per-diem increases by $3 to $163. The IRS also has issued a revenue procedure providing rules for using per diem rates to substantiate the amount of ordinary and necessary business expenses paid or incurred while traveling away from home.
Guidance on electing zero estate tax for 2010 decedents. Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, estates of decedents who died in 2010 can choose zero estate tax, but at the price of beneficiaries being limited to the decedents' basis plus certain increases under Code Sec. 1022 . In early August, the IRS issued detailed guidance on how this election is made. The guidance revealed that the election is made by filing a Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. Specifically, Form 8939 is an information return used by the executor of a decedent who died in 2010: (1) to make the Section 1022 Election; (2) to report information about property acquired from a decedent; and (3) to allocate Basis Increase to certain property acquired from a decedent. In general, Form 8939 is due by Jan. 17, 2012.
Time for executors to make portability election for 2011 decedents. In a new notice and accompanying news release, the IRS reminded executors of the estates of married decedents dying after 2010 that they must file an estate tax return in order to pass along the unused estate and gift tax exclusion amount, available for the first time this year, to their surviving spouse. The first estate tax returns for estates eligible to make the portability election started becoming due on Oct. 3, 2011 (i.e., nine months after a post-2010 date of death). Because the IRS believes that most married couples will want the surviving spouse to be able to take advantage of the unused exclusion amount of the first spouse to die, the election is deemed made if a Form 706 (estate tax return) is properly and timely filed. No affirmative statement or other indication is necessary. Even if the estate isn't required to file a Form 706 (e.g., because the value of the gross estate is less than the exclusion amount), the Form 706 must be filed in ordered to make the election. For estates that choose not to make a portability election, if that estate is otherwise required to file a Form 706, the executor must follow the instructions for Form 706 describing the necessary steps to avoid making the election. For estates that aren't required to file a Form 706, simply not filing the form will effectively prevent the making of the election.
Foreign financial assets disclosure. For tax years beginning after Mar. 18, 2010, the Hiring Incentives to Restore Employment Act of 2010 provides that individuals with an interest in a “specified foreign financial asset” during the tax year must attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets is greater than $50,000 (or a dollar amount higher than $50,000 as the IRS may prescribe). “Specified foreign financial assets” are: (1) depository or custodial accounts at foreign financial institutions, and (2) to the extent not held in an account at a financial institution, (a) stocks or securities issued by foreign persons, (b) any other financial instrument or contract held for investment that is issued by or has a counterparty that is not a U.S. person, and (c) any interest in a foreign entity. Disclosure is made by filing Form 8938 (Statement of Specified Foreign Financial Assets) with the taxpayer's appropriate return (e.g., with Form 1040 in the case of an individual). In September, the IRS released a draft version of the 2011 Instructions to Form 8938. The instructions indicate that under a transitional rule, most taxpayers won't have to file the form until 2012.
Equitable innocent spouse relief eased. Married joint return filers are jointly and severally liable for the tax arising from their returns. Innocent spouses may request relief from this liability in certain circumstances. Previously, the IRS took the position that a request for equitable innocent spouse relief had to be made no later than two years from the first collection activity against the spouse. After being pressured by legislators and the National Taxpayer Advocate, the IRS has now eliminated the two-year period for equitable relief. Elimination of the two-year period is reflected on Form 8857, which is used to request innocent spouse relief.
Supreme Court to decide whether basis overstatements can trigger six-year limitations period. Late last year, the IRS issued final regulations under which an understated amount of gross income reported on a return resulting from an overstatement of unrecovered cost or other basis is an omission of gross income for purposes of the six-year period for assessing tax and the minimum period for assessment of tax attributable to partnership items. The six-year limitations period applies when a taxpayer omits from gross income an amount that's greater than 25% of the amount of gross income stated in the return. Several courts had held that a basis overstatement is not an omission of gross income for this purpose. In response to these decisions, the IRS issued the new regulations to clarify that an omission can arise in that fashion. However, some courts have upheld the regulations and others have rejected them. As a result, the Supreme Court has now decided to resolve the dispute.
Monday, October 3, 2011
Mantyla McReynolds Selected as 2011 Best Accounting Firms to Work For
Mantyla McReynolds was recently named as one of the 2011 Best Accounting Firms to Work For. The annual list of “Best Accounting Firms” was created by Accounting Today and Best Companies Group.
This survey and award program was designed to identify, recognize and honor the best places of employment in the accounting industry, benefiting the nation's economy, its workforce and businesses. The Best Accounting Firms to Work For list is made up of a total of 100 companies throughout the nation.
Accounting firms from across the country entered the two-part survey process to determine the Best Accounting Firms to Work For. The first part consisted of evaluating each nominated firm's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience.
The ranking of the 4th annual Best Accounting Firms to Work for will be unveiled at an awards ceremony sponsored by ADP during Accounting Today’s 2nd Annual Growth & Profitability Summit on October 25th – October 27th at the Bellagio Hotel & Casino in Las Vegas. The list-making firms will also be published in the December issue of Accounting Today.
For more information on the Best Accounting Firms to Work for program, visit www.BestAccountingFirmstoWorkfor.com.
This survey and award program was designed to identify, recognize and honor the best places of employment in the accounting industry, benefiting the nation's economy, its workforce and businesses. The Best Accounting Firms to Work For list is made up of a total of 100 companies throughout the nation.
Accounting firms from across the country entered the two-part survey process to determine the Best Accounting Firms to Work For. The first part consisted of evaluating each nominated firm's workplace policies, practices, philosophy, systems and demographics. The second part consisted of an employee survey to measure the employee experience.
The ranking of the 4th annual Best Accounting Firms to Work for will be unveiled at an awards ceremony sponsored by ADP during Accounting Today’s 2nd Annual Growth & Profitability Summit on October 25th – October 27th at the Bellagio Hotel & Casino in Las Vegas. The list-making firms will also be published in the December issue of Accounting Today.
For more information on the Best Accounting Firms to Work for program, visit www.BestAccountingFirmstoWorkfor.com.
Monday, August 22, 2011
Nine Tips for Charitable Taxpayers
If you make a donation to a charity this year, you may be able to take a deduction for it on your 2011 tax return. Here are the top nine things the IRS wants every taxpayer to know before deducting charitable donations.
1. Make sure the organization qualifies - Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization or check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov.
2. You must itemize - Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. What you can deduct - You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
4. When you receive something in return - If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Recordkeeping - Keep good records of any contribution you make, regardless of the amount. For any cash contribution, you must maintain a record of the contribution, such as a cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity containing the date and amount of the contribution and the name of the organization.
6. Pledges and payments - Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, you can only deduct $200.
7. Donations made near the end of the year - Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
8. Large donations - For any contribution of $250 or more, you need more than a bank record. You must have a written acknowledgment from the organization. It must include the amount of cash and say whether the organization provided any goods or services in exchange for the gift. If you donated property, the acknowledgment must include a description of the items and a good faith estimate of its value. For items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a deduction for a contribution of noncash property worth more than $5,000, you generally must obtain an appraisal and complete Section B of Form 8283 with your return.
9. Tax Exemption Revoked - Approximately 275,000 organizations automatically lost their tax-exempt status recently because they did not file required annual reports for three consecutive years, as required by law. Donations made prior to an organization’s automatic revocation remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions.
For the list of organizations whose tax-exempt status was revoked, visit http://www.irs.gov/. For general information see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Links:
• Publication 526, Charitable Contributions (PDF)
• Publication 561, Determining the Value of Donated Property (PDF)
• Tax Exemptions Revoked
1. Make sure the organization qualifies - Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization or check IRS Publication 78, Cumulative List of Organizations. It is available at www.IRS.gov.
2. You must itemize - Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. What you can deduct - You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
4. When you receive something in return - If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Recordkeeping - Keep good records of any contribution you make, regardless of the amount. For any cash contribution, you must maintain a record of the contribution, such as a cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity containing the date and amount of the contribution and the name of the organization.
6. Pledges and payments - Only contributions actually made during the tax year are deductible. For example, if you pledged $500 in September but paid the charity only $200 by Dec. 31, you can only deduct $200.
7. Donations made near the end of the year - Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the credit card bill or have your bank account debited until the next year.
8. Large donations - For any contribution of $250 or more, you need more than a bank record. You must have a written acknowledgment from the organization. It must include the amount of cash and say whether the organization provided any goods or services in exchange for the gift. If you donated property, the acknowledgment must include a description of the items and a good faith estimate of its value. For items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a deduction for a contribution of noncash property worth more than $5,000, you generally must obtain an appraisal and complete Section B of Form 8283 with your return.
9. Tax Exemption Revoked - Approximately 275,000 organizations automatically lost their tax-exempt status recently because they did not file required annual reports for three consecutive years, as required by law. Donations made prior to an organization’s automatic revocation remain tax-deductible. Going forward, however, organizations that are on the auto-revocation list that do not receive reinstatement are no longer eligible to receive tax-deductible contributions.
For the list of organizations whose tax-exempt status was revoked, visit http://www.irs.gov/. For general information see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at http://www.irs.gov/ or by calling 800-TAX-FORM (800-829-3676).
Links:
• Publication 526, Charitable Contributions (PDF)
• Publication 561, Determining the Value of Donated Property (PDF)
• Tax Exemptions Revoked
Monday, August 15, 2011
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