Since the passage of Tax Cuts and Jobs Act, talk of charitable donations and how it affects your tax situation has changed for many. If you’re one of the many who went from itemizing deductions to no longer doing so, you may now be donating money and not worrying about how it’s recorded.
That situation is not necessarily bad, for you SHOULD still be giving that money. There is great value in donating money to worthy causes even if it doesn’t affect your tax picture. For those who are still in a position where your charitable giving affects your tax picture, however, there’s nothing wrong with being sure that you put it to its best use in all areas. So this week I wanted to write a little bit about how you can do that. In this space, I can only hit on some of the big issues that you may not have realized you should think about. If you want to get deeper into it, click here for the IRS’s information on the subject, or always feel free to contact us and set up a personal discussion for your own situation. The big thing here is to be sure you can substantiate the money that you give. Essentially, you want a record of everything you contribute. An easy way to do this is making donations by check so that the cancelled check serves as that record. Many charities will also give written communication (either with each donation or at the end of the year with a total for that year) detailing what you donated and this will also serve for substantiation purposes. Things gets a little trickier when it comes to cash giving. There is some wiggle room with what you can claim you gave via cash, but if it is anything over $250, you will need a receipt to officially have it allowed. These things get even trickier when you donate to an organization and get something in return. For example, if you give $100 and get a ticket to an event valued at $50, only the $50 difference is considered a charitable contribution. (Trigger warning, the IRS discussion of this involves the term quid pro quo, a term that used to seem so innocent, but now you may be tired of hearing it.) Then there are the situations where you donate property to a charitable organization. If this is something smaller, like donating clothes to Goodwill for example, getting written acknowledgment of the donation is enough. Once these donations go over $500, though, you move into the area where additional tax forms will be needed. And if you get over $5,000 you start to get into an area where qualified appraisals could become necessary. And if you do a lot of work yourself for a charitable organization, did you know that the mileage you drive for the group can also become deductible? Overall, this is a deduction that seems very simple on its surface and is in fact simple for a wide variety of transactions. It doesn’t take THAT much, however, to get into the more complicated areas, and you will want to be sure that you are aware of the rules so that you get the full benefit of your gift. Warmly, Josh Bousquet Connect to Us ~ Facebook ~ Twitter To ensure we don't make the folks at the IRS ornery, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
0 Comments
Leave a Reply. |
Archives
November 2024
Categories
All
|
Website by Odeh Media Group
Copyright ©2024 TSBAS.com, All Rights Reserved |
The Small Business Accounting Solution, Inc
50 South 1st Avenue, Coatesville PA 19320 (844) 208-2937 |