IRS Rules on Deducting Charitable Giving

12902

Every year people give away billions in money and items to charities. This giving helps people in need. There are tax benefits that can come with that giving. To help provide guidance on that giving, the IRS has guidelines. Here are the guidelines:

Rules for Charitable Contributions of Clothing and Household Items

To be tax-deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more that includes, among other things, a description of the items contributed. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

For more on TaxAssurances, check out our reviews, photos and links on Google Reviews.

Also, here is a link to our Signup Form to subscribe to our list.

Advertisements

A Diva’s Budget

  • NEW Everyday Diva Logo PNGPutting together a budget is an extremely helpful tool for someone trying to get their financial house in order. During the process, they can find out what expenses are necessary, what expenses aren’t and what expenses they should start to incur.

Prepare the Budget with an Advisor

I recently sat down with an opera singer who is a friend of mine to go over her budget. For some time she’s had the feeling that she was making a pretty penny but didn’t have anything to show for it.

During the review we were able to determine that certain bills had to be paid. They included rent, car, power, medical insurance, student loans, retirement savings and a number of other necessary bills.

Know the Goals and Outcome of a Budget Review

Now part of the reason that she wanted to go through the exercise was to determine how she could set aside money for simple savings for a rainy day but also carve out a portion of her income for continuing her opera lessons.

With this review we also came across expenses that where secretly and subtly draining her pocket book. Namely food. This included not only the food that she bought for the home but also what she spent every day for breakfast, lunch and dinner. It was adding up.

On top of those expenses she noticed that going out with her friends was hurting her finances. She realized that she was spending too much going to dinners, movies, and generally hanging out with her friends.

Do What the Budget Plan Recommends

Now to be fair, the review was not designed to say that she should stop doing what she was doing all together. It was however designed to let her know where the challenges where and how to fix them. Namely watching what she buys outside the home for lifestyle.

This part of the review is critical. Once we identified what needed to be done she needed to do it. This is not to say that she won’t spend a little extra here and there but she needed to follow the plan to make it work. That way she can achieve a healthy financial balance in her life.

Putting together a budget with a financial advisor can go a long way in getting ones financial house in order. They provide independent, expert eyes that can look at the finances of their clients and determine what the best use of money is and where they can make improvements.

For more on TaxAssurances, check out our reviews, photos and links on Yelp.

You Cannot Deduct Your Commuting Expenses

SONY DSCEvery so often during tax season I get a client that wants to deduct the expense of going back and forth to work on their taxes. They cannot do it. Here is what the IRS says about it:

“You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip.

Example. You sometimes use your cell phone to make business calls while commuting to and from work. Sometimes business associates ride with you to and from work, and you have a business discussion in the car. These activities do not change the trip from personal to business. You cannot deduct your commuting expenses.”

 

For more on TaxAssurances, check out our reviews, photos and links on Yelp.

Teaching Children the Value of Hard Work

21499q0bflrr39zHard work and doing a good job are valued at every level of society. Whether the work is done by a teacher’s assistant that makes $17,000 a year or the leader of a multibillion dollar data storage company, hard work is recognized as playing an important role in everyday life.

Wealth Requires Hard Work

Many people make the mistake of thinking that if someone starts off with a silver spoon in their mouth they’re going to be on easy street and won’t have to work hard. Granted it’s not the same as starting off as the single child to a lazy parent. However, the great equalizer over time is a dedication to hard work.

This is demonstrated in the fact that roughly 80% of millionaires are first generation wealthy. By contrast, lottery winners in many cases no longer have the money they won after 5 or 10 years. Why? They believed they no longer had to work to keep up with the new expenses created by their wealth.

Hard Work with Chores

The hard work ethic is something that parents in all income brackets can give to their children when they’re young. That process can start when parents give chores to their children to do around the house. Not only do the chores show young people how to work hard, but they also show them how to be accountable and responsible. That responsibility means that they are answerable not only for themselves but other family members as well. They are depended on and that carries a valuable lesson throughout their lives.

Hard Work after School

As they get older, the lessons of hard work can be learned in the work children do outside of their normal school work. So whether it’s a part time job after school or a school club they are part of, the parent by allowing their child to participate supplements their school education.

And obviously when they graduate from either high school or college they are tasked with the responsibility of working. No matter where they go it’s a valuable lesson they carry forward with them into the future.

So if you’re a parent wondering how you can instill a work ethic in your child, you can always start by letting them take on that responsibility in the home. Dishes, moping dusting, mowing the lawn are all great ways to get them on the road to learning the value of a hard day’s work. Again, dedication to hard work can be the great equalizer in making sure that young people are good contributors to society.

For more on TaxAssurances, check out our reviews, photos and links on Google Reviews.