Giving to charity may make you feel good and help you lower your tax bill. The IRS offers these nine tips to help ensure your contributions pay off on your tax return.
If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make to either an individual, a political organization, or a political candidate.
You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all non-cash contributions for the year is more than $500, you must also file Form 8283, Non-cash Charitable Contributions, with your tax return.
If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event, or other goods and services.
Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.
Fair market value is generally the price at which someone can sell the property.
You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record, or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.
To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.
You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.
If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.
If you have any questions you can call us at our office, 314-993-4285.
If you pay for college in 2016, you may receive some tax savings on your federal tax return, even if you’re studying outside of the U.S. Both the American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe, but only the AOTC is partially refundable. Here are a few things you should know about education credits:
American Opportunity Tax Credit ‒ The AOTC is worth up to $2,500 per year for an eligible student. This credit is available for the first four years of higher education. Forty percent of the AOTC is refundable. That means, if you’re eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any tax.
Lifetime Learning Credit ‒ The LLC is worth up to $2,000 per tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.
Qualified expenses ‒ You may use only qualified expenses paid to figure your credit. These expenses include the costs you pay for tuition, fees and other related expenses for an eligible student to enroll at, or attend, an eligible educational institution.
Eligible educational institutions ‒ Eligible educational schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify. If you aren’t sure if your school is eligible:
Ask your school if it is an eligible educational institution, or
See if your school is on the U.S. Department of Education’s Accreditation database.
Form 1098-T ‒ In most cases, you should receive Form 1098-T, Tuition Statement, from your school by February 1. This form reports your qualified expenses to the IRS and to you. The amounts shown on the form may be either: (1) the amount you paid for qualified tuition and related expenses, or (2) the amount that your school billed for qualified tuition and related expenses; therefore, the amounts shown on the form may be different than the amounts you actually paid. Don’t forget that you can only claim an education credit for the qualified tuition and related expenses that you paid in the tax year and not just the amount that your school billed.
Income limits ‒ The education credits are subject to income limitations and may be reduced, or eliminated, based on your income.
If you have any questions please do not hesitate to give us a call at our office, 314-993-4285.
This information was received from IRS Tax Tips Issue “IRS Summertime Tax Tip 2016-14”
We’ve been talking about Dependent Care for several years. During summer months, many parents enroll their children in a day camp or pay for day care so they can work or look for work. If this applies to you, your costs may qualify for a federal tax credit. Here is more information directly from the IRS.
10 things to know about the Child and Dependent Care Credit:
Care for Qualifying Persons. Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 generally qualify.
Work-related Expenses. Your expenses for care must be work-related. In other words, you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they are physically or mentally incapable of self-care.
Earned Income Required. You must have earned income. Earned income includes wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care.
Joint Return if Married. Generally, married couples must file a joint return. You can still take the credit, however, if you are legally separated or living apart from your spouse.
Type of Care. You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.
Credit Amount. The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on your income.
Expense Limits. The total expense that you can use in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.
Certain Care Does Not Qualify. You may not include the cost of certain types of care for the tax credit, including:
Overnight camps or summer school tutoring costs.
Care provided by your spouse or your child who is under age 19 at the end of the year.
Care given by a person you can claim as your dependent.
Keep Records and Receipts. Keep all your receipts and records for when you file taxes next year. You will need the name, address and taxpayer identification number of the care provider. You must report this information when you claim the credit on Form 2441, Child and Dependent Care Expenses.
Dependent Care Benefits. Special rules apply if you get dependent care benefits from your employer.
Keep in mind this credit is not just a summer tax benefit. You may be able to claim it at any time during the year for qualifying care. If you have any questions, please call our office, 314-993-4285.
The University City Children’s Center (UCCC) is one of our company’s favorite charities. The UCCC, a non-profit, early childhood education center in St. Louis, has served our community for over 40 years and continues to impact children and families in new, different, and meaningful ways. In 2016, the Center, along with LUME Institute, has contributed to early childhood education in groundbreaking ways. These include: developing the first registered apprenticeship program in the country for early childhood educators with the US Department of Labor, called the Early Childhood Career Pathway Apprenticeship Program; presenting metrics demonstrating LUME’s model of early childhood education to the US Department of Health and Human Services Administration for Children and Families in Washington, DC; and creating one of the only Early Childhood Mental Health Consultation Model programs in the state of Missouri. Check out their website to learn more information, including how you can contribute to the tuition assistance program and partner with UCCC and LUME Institute to continue to work on closing the achievement gap.
As a reminder, a donation to the University City Children’s Center qualifies for a 50% Missouri tax credit in addition to the normal donation deductions. If you have any questions, please call our office, 314-993-4285.
If you are an employer who has purchased their employee’s health insurance through the “Healthcare Exchange” or the “Small Business Health Options Programs (SHOP) Marketplace”, don’t forget to alert your tax preparer.
Beginning in the 2014 tax year, a new form (Form 1095-A) will be required for you, as will a few changes to your standard Form 1040.
You should also prepare for a delay in the preparation of your tax return, as there is an expected delay in the receipt of the Form 1095-A.
If you have any questions or concerns about the ACA, please call our office at 314-993-4285 or e-mail us at firstname.lastname@example.org.
In accordance with changes to the healthcare law, the Affordable Care Act (ACA), beginning with the 2014 tax year small business employers will be unable to take a credit for employee’s health insurance unless the policies were purchased through the Small Business Health Options Programs (SHOP) Marketplace. However, if employers do purchase their employee’s health insurance through SHOP, the credit has increased from the previous amount of 35% up to a maximum of 50% of premiums paid.
If you have any questions or concerns about the ACA, please call our office at 314-993-4285 or e-mail us at email@example.com.
Attention: If you pay the alternative minimum tax, or AMT, you are not getting a tax deduction for the taxes you pay to the state of Missouri!
We have partnered with the University City Children’s Center to change this for you!
By making a donation to the UCCC, you will get many benefits:
– You will be supporting an excellent charity and helping today’s youth.
– You will earn a 50% Missouri tax credit.
– Your effective tax rate will be reduced.
– The IRS will recognize your Missouri estimate payment as deductible.
– The state of Missouri will give you a deduction as a charitable contribution.
If you are interested in learning more about how you could receive the benefits of a donation to the University City Children’s Center, please call our office at 314-993-4285.
For more information on the University City Children’s Center, please go to their website at www.uccc.org
On September 10th, the Missouri Legislature overrode the veto by the Governor and passed a bill which increases the cap on tax credits for contributions made to maternity homes, pregnancy resource centers, and local food pantries.
Would you like to accomplish your charitable goals, reduce or eliminate your Missouri state liability, and give your money to somebody who actually needs it instead of giving it to the state?
If so, the Missouri Youth Opportunity Program is for you.
HKA has partnered with the University City Children’s Center, an excellent organization that promotes creative learning approaches for children, to get you the YOP tax credits you deserve! To make it easier, we have created an excellent process for you.
If you are interested in learning more about the Missouri YOP and our process, please don’t hesitate to call our office at 314-993-4285.
For more information on the University City Children’s Center, please go to their website at www.uccc.org.
Do you plan to travel while doing charity work this summer? Some travel expenses may help lower your taxes if you itemize deductions when you file next year. Here are five tax tips the IRS wants you to know about travel while serving a charity.
1. You must volunteer to work for a qualified organization. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Select Check tool to see if the group is qualified.
2. You may be able to deduct unreimbursed travel expenses you pay while serving as a volunteer. You can’t deduct the value of your time or services.
3. The deduction qualifies only if there is no significant element of personal pleasure, recreation or vacation in the travel. However, the deduction will qualify even if you enjoy the trip.
4. You can deduct your travel expenses if your work is real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
5. Deductible travel expenses may include:
Air, rail and bus transportation
The cost of meals
Taxi fares or other transportation costs between the airport or station and your hotel
Have a question or want to hear more? Give HKA a call at 314-993-4285.