Archive for March 2010

Ten Tips for Deducting Charitable Contributions

March 26, 2010

When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. If you made qualified donations last year, you may be able to take a tax deduction if you itemize on IRS Form 1040, Schedule A.

The IRS has put together the following 10 tips to help ensure your contributions pay off on your tax return.

  1. Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates.
  2. You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance.
  3. If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
  4. Donations of stock or other property are usually valued at the fair market value of the property. Special rules apply to donation of vehicles.
  5. Clothing and household items donated must generally be in good used condition or better to be deductible.
  6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For donations by text message, a telephone bill will meet the record-keeping requirement if it shows the name of the organization receiving your donation, the date of the contribution, and the amount given.
  7. To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
  8. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
  9. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.
  10. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.

Gustavo A. Viera, CPA

IRS to Register and Test Non CPA’s for Competency

March 8, 2010

The IRS on Jan. 4 said it will require registration of paid, signing tax return preparers as well as competency testing and continuing education for preparers other than practitioners (CPAs, attorneys and enrolled agents and others authorized to practice before the IRS). The plan also calls for extending the requirements of Circular 230 beyond practitioners to all paid preparers. The announcement accompanied the release of a report with findings and recommendations resulting from the IRS’ six-month study of the issue, during which it held public forums for tax professionals, taxpayer advocates and the public. Preparers will pay a user fee to register and will, if necessary, obtain a preparer tax identification number (PTIN) to use exclusively when signing federal returns. (Currently, preparers may use either a PTIN or a Social Security number, which has hampered efforts to identify them by return.) Preparers will be required to reregister every three years, when they will also be subject to a limited check of their own personal and business tax filing and payment compliance.

Currently, only practitioners are subject to Circular 230 and oversight by the IRS Office of Professional Responsibility. Nonpractitioners are unregulated at the federal level (although a few states require licensing), and complaints against them are handled by the Criminal Investigation or Small Business/Self-Employed divisions or the Treasury Inspector General for Tax Administration. Placing nonpractitioners under Circular 230 will not, however, authorize them to practice before the IRS.

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