Tag Archives: donations

Don’t Expect the IRS to Take Your Word on Charitable Deductions – Substantiate

by Cindy Toran, Tax Manager

What do we have to say about charitable deductions? Three words, SUBSTANTIATE, SUBSTANTIATE, SUBSTANTIATE!

“Honestly, I attend church every week (religiously) and give $20 cash when the offering plate is passed. So $20 times 52 weeks = $1040 charitable deduction.”  Really?  Not trying to cast any stones here; you have never missed a week of church while on vacation?DSCN1774-300x225

The IRS will disallow such a deduction.  For cash donations the taxpayer must have either:

  1. Bank records (e.g., cancelled check or account statement) OR
  2. Written acknowledgment from the charity documenting the contribution amounts and dates received.

Obviously, for relatively small individual donations using a check may be preferable.

But it gets even more complicated…..

How about single donations of $250 or more?  These must have written acknowledgment from the donee (organization receiving the gift). The gift must:

  1. Be received by either the date the tax return is filed or the extended due date, whichever is earlier. AND
  2. State whether any goods or services were provided in consideration for the contributions; and, if so, an estimate of their FMV.

What if I have payroll deduction contributions?

Substantiation would consist of and require a:

  1. Form W-2 or other employer document AND
  2. Pledge card or other document prepared by the charity.

What about all those household goods and used clothing (i.e., non-cash) items donated?

If <$250 value for each donation, you need a

  1. Receipt unless impractical to obtain (e.g., left at a drop box) AND
  2. Reasonably detailed description of item(s) donated, FMV, method of valuation, date and name of donee.

If the donated item is:

  • >$249, you also must have an acknowledgment from the organization.
  • $250-$500, acquisition cost, approximate date, and how acquired are additional requirements.
  • >$5K, a written appraisal is also required.

Autos, Boats & Planes

Autos, boats and planes are the same as other non-cash donations; and, if the value is at least $250, Form 1098-C from the organization must be obtained.

Volunteer Out-of-Pocket ExpensesAnne-Frank-Quote-circle-300x225

For volunteer out-of-pocket expenses receipts, cancelled checks or other written records are required.  If the amount is >$249 considered separately (e.g., $250 airline ticket), an acknowledgement also mandatory.
Nonetheless, after all this information you may want to note …

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Moving Deductions

Got moving expenses? You may be able to get a tax deduction for them.Fragile-Moving-Box-300x168

The first step is to clear out all your stuff from your attic or basement. If some of that stuff is in good condition, consider donating it and getting a tax deduction for it rather than hauling it with you. It is all about new beginnings. Speaking of new beginnings, perhaps you landed that dream job. If you are moving for a new job, you may be able to deduct your moving expenses.

Here is what you ought to know about moving deductions:

    • The move needs to be job-related

This means you are moving for a new job, or you are moving because of business relocation

    • The timing of the move needs to be correlated with the new job

The time of your move must be closely related to the time of starting your new job or new location of your business. “Closely related,” as defined by the IRS, generally means within a year of starting your new job or relocating due to business. If you are unemployed, it is not necessary that you arrange work before heading to a new locale.

    • Unlike some other tax provisions, you actually need to work for this one

If you are a current employee, directly after your move, you must work at least full-time, 39 weeks in the first 12 months. If you are self-employed or unemployed, the above applies, plus, you must work at least 78 weeks in the first 24 months.

    • You need to satisfy the 50 mile rule

Your new workplace must be at least 50 miles farther than what your past job was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home.

moving-expense-graphic-1024x314

So what are allowable deductions?

    • Tax deductions for travel

Expenses that you can claim are gas, oil, tolls, and parking fees. For mileage, you can either keep tabs on expenses, or you can take the standard deduction of 23.5 cents per mile.

    • Packing and moving belongings

These types of expenses are deductible. And also is the cost of shipping your pets or cars.

    • Storage cost

Any storage costs associated with your move, starting on the day you leave your former home and for the next 30 days, are tax deductible.

Welcome to Massachusetts!

If you came to Massachusetts for a new job, the tax deduction carries over to your Mass tax return. That is the consolation prize for having to file two state part-year resident tax returns. If you are leaving Massachusetts, well, you are out of luck on Mass, unless you are moving to one of these other fine welcoming states that allow a moving expense deduction.

What has been the furthest distance you were required to move either as a result of a job change? Leave your comment below or visit our Facebook or Google+ pages.

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Getting Married? See What Can Be Tax Deductible

Category: Deductions
Tags: donations, gifts
Getting Married?
These days weddings can easily break the piggy bank. But you can help to defray some of your costs with careful planning. There are tax write-offs that you can take advantage of, if you take the right steps.
Do you anticipate wearing your wedding gown again?
Most hope not, so why not donate it? Consider bridesmaid and flower girl dresses as well. There are many charitable organizations that would be happy to receive them, and not only will someone else take pleasure in them, but you will be able to use the donations as a tax deduction.
Where are you having your service?
If in a church, and, if you are paying a fee, check to see if the fee can be waived for members who contribute over a certain amount. It could be worthwhile to up your donations for the year to qualify for the waived fee. Donating to a good cause makes you feel good as well as help with tax deductions.
Where are you having your reception?
If you pick a non-profit location for your ceremony or reception, that’s another tax deduction. Places like museums, historic homes or buildings, or publicly owned parks usually use the money for maintenance and preservation. But before you book, make sure you verify that the location is a non-profit.
Want your gifts to give?
Set up your gift registry through the IDoFoundation. A percentage of the cost of each gift purchased through the foundation will be given to the charity you choose. The IDoFoundation has selected charities that ‘promote social change in underserved communities’. Couples can find a list of charities and guests can find a list of participating stores on the foundation’s Website.
Looking for something unique to give your bridal party attendants?
Considering the cost of weddings, most aren’t able to give extravagant gifts to each participant. So instead, think about donations in their names to their favorite charities? Another tax write-off.
Leftover food from the rehearsal dinner or wedding meal?
Donating items to a food pantry, rescue mission, shelters, or other non-profit organizations can provide a nutritious meal, and can help aid with food budgets. But, while this is another donation to write off, there are definitely items that you can’t donate such as opened food items, or personally wrapped meats. Check first with the charity to see what they can accept and have a volunteer standing by for delivery.
Done with your flowers?
Don’t let them wilt without anyone enjoying them. Donate them to a nursing home, hospital, or other care facility to help cheer up the elderly or patients receiving medical treatment. Not only will it make you feel good, but can also help with taxes.
Receipts, receipts, receipts
To substantiate your donation claims with the IRS, make sure you have the receipts from the charitable organizations, and hold on to the contract with your wedding venue, along with the payment receipt.
While these deductions won’t cover the cost of your wedding, they can at least take some of the sting out of your taxes.
Get guidance from you tax preparer and ask about filing jointly.

These days weddings can easily break the piggy bank. But you can help to defray some of your costs with careful planning. There are tax write-offs that you can take advantage of, if you take the right steps.

Do you anticipate wearing your wedding gown again?

small__11422721263-300x189Most hope not, so why not donate it? Consider bridesmaid and flower girl dresses as well. There are many charitable organizations that would be happy to receive them, and not only will someone else take pleasure in them, but you will be able to use the donations as a tax deduction.

Where are you having your service?

If in a church, synagogue, or other place of worship, and if you are paying a fee, check to see if the fee can be waived for members who contribute over a certain amount. It could be worthwhile to up your donations for the year to qualify for the waived fee. Donating to a good cause makes you feel good as well as help with tax deductions.

Where are you having your reception?

If you pick a non-profit location for your ceremony or reception, that’s another tax deduction. Places like museums, historic homes or buildings, or publicly owned parks usually use the money for maintenance and preservation. But before you book, make sure you verify that the location is a non-profit.

Want your gifts to give?

Set up your gift registry through the IDoFoundation. A percentage of the cost of each gift purchased through the foundation will be given to the charity you choose. The IDoFoundation has selected charities that ‘promote social change in underserved communities’. Couples can find a list of charities and guests can find a list of participating stores on the foundation’s Website.

Looking for something unique to give your bridal party attendants?

Considering the cost of weddings, most are not able to give extravagant gifts to each participant. So instead of giving them doodads, think about donations in their names to their favorite charities? Another tax write-off.

Leftover food from the rehearsal dinner or wedding meal?

Donating items to a food pantry, rescue mission, shelters, or other non-profit organizations can provide a nutritious meal, and can help aid with food budgets. But, while this is another donation to write off, there are definitely items that you cannot donate such as opened food items, or personally wrapped meats. Check first with the charity to see what they can accept and have a volunteer standing by for delivery.

Done with your flowers?

small__4821961570-300x200Don’t let them wilt without anyone enjoying them. Donate them to a nursing home, hospital, or other care facility to help cheer up the elderly or patients receiving medical treatment. Not only will it make you feel good, but can also help with taxes.

Receipts, receipts, receipts

To substantiate your donation claims with the IRS, make sure you have the receipts from the charitable organizations, and hold on to the contract with your wedding venue, along with the payment receipt.

While these deductions won’t cover the cost of your wedding, they can at least take some of the sting out of your taxes.

Get guidance from you tax preparer and ask about filing jointly. If you don’t have a tax preparer, feel free to contact us, one of our staff would be happy to answer any questions you may have.

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photo credit: Armando G Alonso via photopin cc
photo credit: Vicky Hugheston via photopin cc
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