Gifts to Charity: Six Facts About Written Acknowledgements

 

Throughout the year, many taxpayers contribute money or gifts to qualified organizations eligible to receive tax-deductible charitable contributions. Taxpayers who plan to claim a charitable deduction on their tax return must do two things:

• Have a bank record or written communication from a charity for any monetary contributions.

• Get a written acknowledgment from the charity for any single donation of $250 or more.

Here are six things for taxpayers to remember about these donations and written acknowledgements:

• Taxpayers who make single donations of $250 or more to a charity must have one of the following:A separate acknowledgment from the organization for each donation of $250 or more.One acknowledgment from the organization listing the amount and date of each contribution of $250 or more.
• The $250 threshold doesn’t mean a taxpayer adds up separate contributions of less than $250 throughout the year.
• For example, if someone gave a $25 offering to their church each week, they don’t need an acknowledgement from the church, even though their contributions for the year are more than $250.
• Contributions made by payroll deduction are treated as separate contributions for each pay period.
• If a taxpayer makes a payment that is partly for goods and services, their deductible contribution is the amount of the payment that is more than the value of those goods and services.
• A taxpayer must get the acknowledgement on or before the earlier of these two dates:
• The date they file their return for the year in which they make the contribution.
• The due date, including extensions, for filing the return.
• If the acknowledgment doesn't show the date of the contribution, the taxpayers must also have a bank record or receipt that does show the date.

Source:Internal Revenue Service

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IRS Reminds Educators of Tax Benefits

IRS Reminds Educators of Tax Benefits

WASHINGTON — As teachers, administrators and aides have launched into their fall semester, taxes may not be on the top of their list. However, knowing what to keep track of now can help reduce the burden at tax time. The Internal Revenue Service reminds educators that there are three key work-related tax benefits that may help them reduce what they pay in taxes.

Educators can take advantage of tax deductions for qualified expenses related to their profession. The costs many educators incur out-of-pocket include items such as classroom supplies, training and travel.

There are two methods educators can choose for deducting qualified expenses: Claiming the Educator Expense Deduction (up to $250) or, for those who itemize their deductions, claiming eligible work-related expenses as a miscellaneous deduction on Schedule A.

A third key benefit enables many teachers and other educators to take advantage of various education tax benefits for their ongoing educational pursuits, especially the Lifetime Learning Credit or, in some instances depending on their circumstances, the American Opportunity Tax Credit.

Educator Expense Deduction

Educators can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each) of unreimbursed business expenses. To do so, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide for at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

Those who qualify can deduct costs like books, supplies, computer equipment and software, classroom equipment and supplementary materials used in the classroom. Expenses for participation in professional development courses are also deductible. Athletic supplies qualify if used for courses in health or physical education.

Itemizing Deductions (Using Schedule A)

Often educators have qualifying classroom and professional development expenses that exceed the $250 limit. In that case, the IRS encourages them to claim these excess expenses as a miscellaneous deduction on Schedule A. In addition, educators can claim other work-related expenses, such as the cost of subscriptions to professional journals, professional licenses and union dues. Transportation expenses may also be deductible in situations such as, for example, where an educator assigned to teach at two different schools needs to drive from one school to the other on the same day.

Miscellaneous deductions of this kind are subject to a  two-percent limit. This means that a taxpayer must subtract two percent of their adjusted gross income from the total qualifying miscellaneous deduction amount.

Keeping Records

Educators should keep detailed records of qualifying expenses noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time.

Source: Internal Revenue Service

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Job Search Expenses Can be Tax Deductible

Taxpayers who are looking for a new job that is in the same line of work may be able to deduct some job-hunting expenses on their federal income tax return, even if they don’t get a new job.
Here are some important facts to know about deducting costs related to job searches:

1. Same Occupation. Expenses are tax deductible when the job search is in a taxpayer’s current line of work. 
2. Résumé Costs. Costs associated in preparing and mailing a résumé are tax deductible.
3. Travel Expenses. Travel costs to look for a new job are deductible. Expenses including transportation, meals and lodging are deductible if the trip is mainly to look for a new job. Some costs are still deductible even if looking for a job is not the main purpose of the trip.
4. Placement Agency. Job placement or employment agency fees are deductible.
5. Reimbursed Costs. If an employer or other party reimburses search related expenses, like agency fees, they are not deductible.
6. Schedule A. Report job search expenses on Schedule A of a 1040 tax return and claim them as miscellaneous deductions. The total miscellaneous deductions cannot be more than two percent of adjusted gross income.

Taxpayers can’t deduct these expenses if they:

• Are looking for a job in a new occupation,
• Had a substantial break between the ending of their last job and looking for a new one, or
• Are looking for a job for the first time

Source: Internal Revenue Service

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Tips to Keep in Mind on Income Taxes and Selling a Home

Homeowners may qualify to exclude from their income all or part of any gain from the sale of their main home.

Below are tips to keep in mind when selling a home:
Ownership and Use. To claim the exclusion, the homeowner must meet the ownership and use tests. This means that during the five-year period ending on the date of the sale, the homeowner must have:

• Owned the home for at least two years  
• Lived in the home as their main home for at least two years    Gain.  If there is a gain from the sale of their main home, the homeowner may be able to exclude up to $250,000 of the gain from income or $500,000 on a joint return in most cases. Homeowners who can exclude all of the gain do not need to report the sale on their tax return

Loss.  A main home that sells for lower than purchased is not deductible.
Reporting a Sale.  Reporting the sale of a home on a tax return is required if all or part of the gain is not excludable. A sale must also be reported on a tax return if the taxpayer chooses not to claim the exclusion or receives a Form 1099-S, Proceeds from Real Estate Transactions.
Possible Exceptions.  There are exceptions to the rules above for persons with a disability, certain members of the military, intelligence community and Peace Corps workers, among others.
Worksheets.  Worksheets are included in Publication 523, Selling Your Home, to help you figure the:

• Adjusted basis of the home sold
• Gain (or loss) on the sale
• Gain that can be excluded

Items to Keep In Mind:

• Taxpayers who own more than one home can only exclude the gain on the sale of their main home. Taxes must paid on the gain from selling any other home.
• Taxpayers who used the first-time homebuyer credit to purchase their home have special rules that apply to the sale. Use the First Time Homebuyer Credit Account Look-up to get account information such as the total amount of your credit or your repayment amount.
• Work-related moving expenses might be deductible;
• Taxpayers moving after the sale of their home should update their address with the IRS and the U.S. Postal Service by filing Form 8822, Change of Address.
• Taxpayers who purchased health coverage through the Health Insurance Marketplace should notify the Marketplace when moving out of the area covered by the current Marketplace plan.

 

Source: Internal Revenue Service

contact@officetaxservices.com

(858)247-1680