Tax News for Tax Year 2017

Giving Tuesday: 5 Best Tax Tips For Deducting Donations

John Wasik , Contributor

Opinions expressed by Forbes Contributors are their own.

 

With all of the wrangling over tax “reform” by the GOP, one piece of the tax code remains untouched for now: Charitable donations.

If you’re writing checks, donating goods or other assets, though, you need to know the rules on what’s deductible. The IRS is picky on what you can write off.

Every year you need to compile receipts and tally what you’ve given to charity. It can really add up, so it’s important to get your records in order. Here are some basic rules from the IRS:

— Are You Itemizing? You can’t really write off charitable contributions unless you list or “itemize” them on Schedule A of your 1040 form.

In addition, if you’re donating a vehicle, boat or plane, you’ll need to provide yet another form — 1098-C

— Are You Donating to a `Qualified’ Charity? While there are tens of thousands of non-profits, not all are charities that qualify for a tax write-off.

Political candidates and lobbying organizations, for example, don’t qualify for a charitable contribution. The general rule is that the organization must be a “501 (c) 3” non-profit.

For those of you who care about the tax code, it’s a “501 (c) 4” non-profit that won’t qualify for a write-off. You can check an organization’s tax status here.

— Pay Close Attention to Market Value. This is of particular importance when donating clothes and vehicles. You can obtain a fair market value for cars, for example, on Edmunds.com.

Why is “fair market” value important? The IRS will do a double-take if you say your donated 10-year-old car with 100,000 miles on it is worth $40,000.

— Collect Receipts. The IRS wants receipts for anything worth more than $250. That means a charity must send you a letter acknowledging the gift.

Here’s what the agency says you should do:

“The statement (from a charity) must show:

1. The amount of the donation.

2. A description of any property given.

3. Whether the taxpayer received any goods or services in exchange for their gift, and, if so, must provide a description and good faith estimate of the value of those goods or services.”

— Be careful about charity events. Charities sell tickets for fundraisers and fancy dinners all the time, but you can’t deduct the full cost of the tickets.

Here’s where you need to ask a pointed question of the charity sponsoring the event:

“Taxpayers may receive something in return for their donation. This includes things such as merchandise, meals, and event tickets.

Taxpayers can only deduct the amount of the donation that’s more than the fair market value of the item they received. To figure their deduction, a taxpayer would subtract the value of the item received from the amount of their donation.”

Most charities will tell you what the deductible amount is of their merchandise or event. If not, ask them.

John F. Wasik is the author of “Lightning Strikes,” “Keynes’s Way to Wealth“and 15 other books on innovation, money and life. Follow him on Twitter and Facebook.

 

 https://www.forbes.com/sites/johnwasik/2017/11/28/giving-tuesday-5-best-tax-tips-for-deducting-donations/?ss=taxes#642283ae6dbb

By admin, ago

Get Ready for Taxes: Plan Ahead for 2018 Filing Season to Avoid Refund Delays

IR-2017-185, Nov. 7, 2017

WASHINGTON –The Internal Revenue Service today advised taxpayers about steps they can take now to ensure smooth processing of their 2017 tax return and avoid a delay in getting their refund next year. This is the first in a series of reminders to help taxpayers get ready for the upcoming tax filing season. Additionally, the IRS has a special page on its website with steps to take now for the 2018 tax filing season.

Gather Documents

The IRS urges all taxpayers to file a complete and accurate tax return by making sure they have all the documents before they file their return, including their 2016 tax return. This includes Forms W-2 from employers, Forms 1099 from banks and other payers, and Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit. Doing so will help avoid refund delays and the need to file an amended return later. Confirm that each employer, bank or other payer has a current mailing address.

Typically, these forms start arriving by mail in January. Check them over carefully, and if any of the information shown is inaccurate, contact the payer right away for a correction.

Taxpayers should keep a copy of their 2016 tax return and all supporting documents for a minimum of three years. Doing so will make it easier to fill out a 2017 return next year. In addition, taxpayers using a software product for the first time may need the Adjusted Gross Income (AGI) amount from their 2016 return to properly e-file their 2017 return. Learn more about verifying identity and electronically signing a return at Validating Your Electronically Filed Tax Return.

Renew Expiring ITINs

Some people with an Individual Taxpayer Identification Number (ITIN) may need to renew it before the end of the year. Doing so promptly will avoid a refund delay and possible loss of key tax benefits.

Any ITIN not used on a tax return in the past three years will expire on Dec. 31, 2017. Similarly, any ITIN with middle digits 70, 71, 72 or 80 will also expire at the end of the year. Anyone with an expiring ITIN who plans to file a return in 2018 will need to renew it using Form W-7.

Once a completed form is filed, it typically takes about seven weeks to receive an ITIN assignment letter from the IRS. But it can take longer — nine to 11 weeks — if an applicant waits until the peak of the filing season to submit this form or sends it from overseas. Taxpayers should take action now to avoid delays.

Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits. For more information, visit the ITIN information page on IRS.gov.

Refunds Held for Those Claiming EITC or ACTC Until Mid-Feb

By law, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund — even the portion not associated with EITC or ACTC. The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or debit cards starting on Feb. 27, 2018, if direct deposit was used and there are no other issues with the tax return. This additional period is due to several factors, including the Presidents Day holiday and banking and financial systems needing time to process deposits. This law change, which took effect at the beginning of 2017, helps ensure that taxpayers receive the refund they’re due by giving the IRS more time to detect and prevent fraud.

As always, the IRS cautions taxpayers not to rely on getting a refund by a certain date, especially when making major purchases or paying bills. Though the IRS issues more than nine out of 10 refunds in less than 21 days, some returns require further review.

For a Faster Refund, Choose e-file

Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds and the easiest way to avoid them is to e-file. Nearly 90 percent of all returns are electronically filed. There are several e-file options:

Use Direct Deposit.

Combining direct deposit with electronic filing is the fastest way for a taxpayer to get their refund. With direct deposit, a refund goes directly into a taxpayer’s bank account. There’s no reason to worry about a lost, stolen or undeliverable refund check. This is the same electronic transfer system now used to deposit nearly 98 percent of all Social Security and Veterans Affairs benefits. Nearly four out of five federal tax refunds are direct deposited.

Direct deposit saves taxpayer dollars. It costs the nation’s taxpayers more than $1 for every paper refund check issued but only a dime for each direct deposit.

https://www.irs.gov/newsroom/get-ready-for-taxes-plan-ahead-for-2018-filing-season-to-avoid-refund-delays

By admin, ago

With Year-End On The Way, Don’t Forget About Tax Form Due Dates

The end of the year will be here before you know it – and that means year-end tax forms will soon be on their way.
That’s right – many year-end tax forms are now due in January. As part of the Protecting Americans from Tax Hikes (PATH) Act, the filing deadline for employers to submit forms W-2 (and forms W-3) to the Social Security Administration, is January 31. The January 31 filing deadline also applies to certain forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.

The law went into effect for forms filed last year so the relatively new deadline may still be confusing to employers and taxpayers. The Internal Revenue Service (IRS) is hoping to get a jump on next tax season by issuing a reminder to employers and other businesses of the filing deadline.
In the past, employers and businesses could wait until the end of February, if filing on paper, or the end of March, if filing electronically, to submit these forms. However, the gap between the old due date and the beginning of the filing season made it difficult for the IRS to match up forms W-2 and forms 1099 with individual taxpayer returns requesting tax refunds. The result? Room for fraud. The new deadline, which was on the wish list for the IRS, will make it easier to verify the legitimacy of tax returns and properly issue refunds to taxpayers. The IRS says that, in many instances, this will enable them to release tax refunds more quickly than in the past.

The IRS is also asking employers to verify employee information, including names, addresses, Social Security or individual taxpayer identification numbers. If your employer asks you to verify this information, it’s to your advantage to do it sooner rather than later – especially if you are hoping for a tax refund in 2018.
Of course, with proposed tax reform on the way, a lot could still happen between now and January 31. Check back for the latest information – I’ll post as soon as it’s made available.

Source: https://www.forbes.com/sites/kellyphillipserb/2017/11/20/with-year-end-on-the-way-dont-forget-about-tax-form-due-dates/?ss=taxes#629d3bd7396d

By admin, ago