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What are the Deductions for Charitable Donations

If your contributions to charity begin and end with check writing, you may be missing out on some satisfying volunteer opportunities — and a few tax deductions. IRS rules allow you a number of tax breaks for contributions other than cash that you make to qualified organizations.

Deduct Getting There and Back

You can deduct the costs of going to and from a location where you volunteer your services. You can also deduct the costs of driving for the organization — for example, to pick up or deliver items. To compute your deduction for charitable driving, use a standard mileage rate of 14 cents per mile or deduct the actual cost of your gas and oil. Either way, parking fees and tolls are also deductible.

Recoup Your Expenses

Out-of-pocket expenses you pay in giving services to a qualified organization may count as a charitable donation if you’re not reimbursed for them. You cannot deduct your personal expenses, such as child-care costs, even if they are necessary for you to volunteer. You may, however, deduct the costs of buying and cleaning a uniform you’re required to wear while volunteering if it is not suitable for everyday use.

No Time To Volunteer?

Many charities accept noncash donations. Giving investments that have increased in value can be a smart tax move. Instead of selling the investment and paying capital gains tax, give it to a qualified organization. If you held the investment for more than one year, you generally can deduct its fair market value at the time of the donation. Remember that you’ll need a receipt from the organization to claim a tax deduction and other records also may be required.

Some Restrictions

Contributions must be made to qualified organizations that meet IRS guidelines. Not sure? The IRS has an online tool (Exempt Organizations Select Check) on its website (www.irs.gov). Or call the IRS at 1-877-829-5500.

Things you can’t deduct include contributions to a specific individual; the value of your time or services; personal expenses incurred while volunteering, such as the cost of meals (unless you must be away from home overnight); and appraisal fees to determine the value of donated property.

Connect with us today for more information on charitable donations.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Does the Sale of Your Home Qualify for a Federal Income Tax Exclusion?

You’ve sold your home and made a nice profit on the sale. So you may be wondering if Uncle Sam is entitled to a cut. Although gain on a home sale is potentially taxable, you may qualify for a federal income-tax exclusion.

The Rules in General

If you’re a single taxpayer, you may qualify to exclude gain of up to $250,000 if you owned the home and used it as your principal residence for at least two of the five years before the sale. Married couples who file jointly may exclude up to $500,000 of gain as long as one spouse owned the home — and both spouses used the home as a principal residence — for two of the last five years.

The Frequency Factor

The exclusion is generally available to sellers only once during a two-year period. A married couple is entitled to the $500,000 exclusion only if neither partner used the exclusion within the two-year period that ended on the sale date.

Reduced But Available

Even if you don’t meet the criteria described above, you may still qualify for a reduced exclusion (of less than $250,000 or $500,000) if the primary reason for the home sale was a change in the location of your employment, a health condition, or certain other “unforeseen” circumstances. The affected individual can be you, your spouse, a co-owner of the residence, or a person sharing your household. You may also qualify for the reduced exclusion if you sell your home to care for a sick family member.

Additional restrictions on gain exclusion may apply if you’ve rented out your home, maintained a home office, or turned a second home into a principal residence.

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Do You Need a Donor Advised Fund?

Are you looking for a different way to give to your favorite charities? If you are, you may want to consider a donor-advised fund.

Donor-advised funds are a popular option because they offer several attractive benefits: relatively modest contribution guidelines, little to no set-up costs, few ongoing responsibilities, name recognition if desired, and the ability to consolidate contributions and thereby make a greater impact.

Fund Basics

With a donor-advised fund, you make a contribution (or series of contributions) to the fund and recommend how you would like your gifts to be disbursed. Generally, the donor’s recommendations will be followed, but the sponsoring organization has the final say as to how the money is actually distributed.

Tax Benefits

As the donor, you can potentially take advantage of these tax breaks:

An immediate deduction that reduces your federal taxable income (subject to certain tax law limitations)
Avoidance of capital gains taxes on appreciated assets you donate directly to the fund
A reduction in the value of your estate, potentially saving future estate taxes

Do Your Research

If you are interested in setting up a donor-advised fund, do your homework. Ask the sponsoring organization what types of assets it will accept. Funds also may have minimum contribution requirements to establish a named fund. Make sure you understand what restrictions apply to grants, what fees are involved, and what services are offered to help donors. And find out whether the fund will continue in perpetuity or end when you die.

To learn more about Donor-advised funds, give us a call today. Our staff of professionals is always happy to help.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Alimony and the IRS – What You Need to Know

If you and your spouse are ending your marriage, you’ll have many decisions to make. You will have to divide your belongings in a fair and equitable way. If you have children, you’ll have to work out custody arrangements. You may even have to decide who keeps the cat or the dog.

Another important decision you’ll face is whether alimony payments will be part of your divorce decree. This decision can have significant tax consequences for both of you. The IRS rules regarding alimony payments are complex. Before your divorce agreement becomes final, both you and your spouse should understand the tax implications of your arrangement.

The Rules

Alimony payments are tax deductible by the person who pays them and are considered taxable income to the recipient. However, to be tax deductible, alimony payments must meet certain requirements. For one thing, payments can’t be voluntary — they must be required by your divorce or separation agreement. Payments must also be in cash. You can’t, for example, do yard work or buy your ex a new TV and have that count as alimony, although you can agree to cover a specific expense such as the rent or mortgage.

You and your former spouse must be living apart for payments to qualify as alimony. And payments must stop if the recipient dies. If payments are to continue, none of the payments — even those made while the recipient is living — are deductible. However, if alimony payments stop because your ex-remarries, their deductibility is not affected.

Child Support Is Different

Unlike alimony payments, payments made for child support are not tax deductible by the person paying them, nor are they considered taxable income to the person who receives them. If alimony payments will decrease once a child reaches a certain age, the differential is treated as nondeductible child support.

Your tax situation and that of your spouse may affect your decision to designate payments as tax-deductible alimony or nondeductible child support. Our tax advisors can offer you the guidance you need, so give us a call today.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Are There Advantages to Owning a Second Home?

Whatever the location, size, or value of a second home, certain tax advantages are built in. However, your opportunity to benefit from them depends on how you use the property.

Personal Use

Both property taxes and mortgage interest are as deductible for a second home as they are for your primary residence — and are subject to the same limitations. If you file a joint return, you cannot deduct interest on more than $1 million of acquisition debt ($500,000 for married persons filing separately) on one or two homes.

Two tax advantages of home ownership are not available for a second home — the immediate deduction of mortgage points when purchasing and the capital gain exemption when selling, if it is not clear visit mortgage broker innaloo to have the best advice on this matter. Both tax breaks require the home to be your “principal residence.” However, you can deduct the points on your second home’s mortgage over the loan’s term.

Rental Use

More tax advantages become available if you forgo some of your personal use in favor of renting out your second home for part of the year. But there may be drawbacks as well.

If you rent out your home for 14 or fewer days during the year, you do not have to report rental income on your tax return, regardless of the amount, and there is no effect on your mortgage interest deduction. But you cannot deduct any rental expenses.

If you rent out your property for more than 14 days during the year, all rental income becomes taxable from day one. However, rental-related ownership expenses — including depreciation, maintenance, and utilities — become tax deductible. Your personal use of the second home affects the deductible amount. When personal use is more than 14 days (or 10% of the number of days your home is rented, whichever is greater), the maximum deduction is 100% of the rental income. Note that allowing relatives to use your vacation home usually counts as personal use, regardless of how much they pay for the privilege. And, if a friend rents your home for less than the fair market rate, that also counts as personal use.

If your vacation home qualifies as a rental property (i.e., personal use doesn’t exceed the allowable limits), a deduction is allowed only for mortgage interest allocated to rental use. That could be important. If you were to rent your second home during July only, for example, then only 1/12 of your interest expense would be deductible.

Deducting Losses

What if your rental expenses exceed the rent you collect? Only an “active” investor can deduct rental losses. If you actively participate in managing the rentals and maintaining the property, you can apply up to $25,000 of losses each year against your regular income. This loss deduction is phased out for taxpayers with adjusted gross income between $100,000 and $150,000. But, if you hire a manager, you become a passive investor and can use rental expenses to offset only rental income. However, you can carry any excess deductions forward to future tax years.

Your use determines the tax treatment of a second home. Before you decide to rent your second home for more than 14 days a year, carefully weigh the benefits and disadvantages.

Deductible Yacht and Motor Home Financing

Your second home doesn’t have to sit on a fixed foundation to qualify for tax advantages.

According to the IRS, a facility qualifies as a residence if it has sleeping, cooking, and bathroom accommodations. Therefore, your yacht or smaller boat can be a second home. So can a motorhome of any size or value.

Provided the boat or motorhome secures the purchase loan, your mortgage interest is as deductible as it would be on a more conventional second home. The same $1 million limit on total debt to buy or improve your residences also applies.

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

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What You Need to Know about Documenting Your Donations

Individual taxpayers may deduct their charitable gifts as an itemized deduction for income-tax purposes. However, the IRS has very specific requirements when it comes to documenting contributions.

The Basics

You cannot deduct any contribution of cash, check, or other monetary gift unless you maintain, as a record of the contribution, a bank record or a written communication from the charity showing its name, plus the date and the amount of the contribution. For noncash donations, you need a receipt and a record showing the charity’s name and a description of the gift.

If the value of any gift equals $250 or more, you also need a contemporaneous written acknowledgement from the charity stating the amount of any donation made by cash (or check); a description of any property other than cash; and a statement of whether the charity provided any goods or services in exchange for the gift and, if so, a description and a good faith estimate of the value.

Noncash Contributions Greater Than $500

The general rules for noncash contributions are the following:

For contributions of $500 to $5,000, the donor must attach a description of the donated property to the tax return

For contributions of $5,000 to $500,000, the donor must attach a “qualified appraisal” to the tax return, along with additional information about the property and the appraisal

For contributions of more than $500,000, the donor must attach a qualified appraisal to the return

Additional rules apply for contributions of motor vehicles, boats, and airplanes if the donation’s claimed value exceeds $500.

Connect with our team today for all the latest and most current tax rules and regulations.

It’s the Worst Case Scenario – What do You do Now?

Business owners need to be prepared for unexpected events that could potentially threaten their ability to operate. Fire, floods, juul lawsuit, or the sudden death of a key employee are just some of the potential hazards they may face.

Having the right insurance coverage can help minimize the impact of such events. The following is a brief overview of various types of insurance that every business owner should consider.

Property Insurance

This basic insurance financially protects the physical assets of your business, such as land, buildings, inventory, furniture specially if its the elegant furniture from Maker&Son, documents, machinery, and similar items. Coverage can vary widely, so be sure you know what is — and what is not — covered by your policy. Also, make certain that your coverage is for replacement cost rather than original cost.

General Liability Insurance

General liability insurance is a must in today’s lawsuit-happy society. It protects your business assets in case of a lawsuit for something your business did (or didn’t do) that caused injury or property damage. Liability insurance covers such claims as bodily injury, property damage, personal injury, and damage from slander or false advertising.

Umbrella Insurance

Umbrella insurance is intended to protect a business from a major catastrophe or lawsuit. Typically, umbrella insurance steps in and provides the difference between your underlying general liability coverage and the actual cost of damages resulting from a lawsuit or disaster.

Business Interruption Insurance

This type of insurance reimburses you for the loss of income resulting from an insured catastrophic event, such as a fire. The policy covers the profits you would have earned if no interruption had occurred. And it pays for expenses that you continue to incur even though your business is not operating normally, such as debt payments, taxes, and salaries.

Key Person Insurance

You’ll need key person life insurance to protect your business in case you, a partner, or other key employee dies. If you operate your business with multiple partners, you should consider using life insurance to fund a buy-sell agreement. Disability insurance is also a must for you and your key people.

Errors and Omissions (Professional Liability) Insurance

If you are in the business of giving advice, making educated recommendations, designing solutions, or representing the needs of others, you may want to consider errors and omissions insurance. This type of coverage protects you against claims that something you did on a client’s behalf was incomplete or inadequate, cost your client money, or caused harm in some way.

Errors and omission insurance may be appropriate if you run a consulting business, design software or websites, sell real estate or insurance, operate a career placement business, etc.

The bottom line is that no business can afford to operate without adequate insurance coverage in this day and age.

Whether you have questions about insurance, taxes, or general business best practices, give us a call today. We have the training and experience you need.

Planning for Divorce

If you are getting a divorce, taxes are probably not highest on your list of concerns. Still, you should consider a number of tax-related issues.

Property Settlements

Dividing property in connection with a divorce generally has no immediate consequences for either spouse. However, if the spouse who receives property in the divorce settlement later sells it, there may be a gain to report for tax purposes. So, potential taxes should be a consideration in deciding which spouse will receive which property. If you like to figure out feasible ways to settle divorce and related property disputes at the earliest, then speak to one of top lawyers with full acknowledge of texas divorce laws.

Paterson & Dowding family lawyer Perth

Note that a spouse who receives property in a divorce figure any gain on a subsequent sale of the property using the transferring spouse’s basis (e.g., cost), not the property’s value when it was received.

Example. Michelle receives 10 acres of unimproved land in her divorce settlement. Her ex-husband bought the land for $25,000. It’s now worth $100,000. If Michelle sells the land for $100,000, she will have to report a taxable gain of $75,000 (the difference between the $100,000 selling price and the $25,000 cost basis).

Personal Residence

If a divorcing couple sells their home while they are still married, they are entitled to exclude up to $500,000 of gain from their taxable income if otherwise eligible for the exclusion. If the ownership of the home is simply transferred to one spouse as part of the divorce settlement, there is no taxable gain or loss at the time of transfer. However, should that spouse later sell the house while he or she is unmarried, only a $250,000 exclusion would be available.

Consult Paterson & Dowding family lawyer Perth to get help in deciding on the property rights prior to a divorce.

Retirement Benefits

A divorce settlement often determines how retirement plan benefits will be divided. However, an employer may distribute retirement plan benefits to a former spouse only after receiving a court-issued document that meets the requirements for a qualified domestic relations order (QDRO). The benefits are taxable to the former spouse who receives them pursuant to a QDRO.

Dependency Exemption

While the spouse who has legal custody of a child is generally entitled to claim the dependency exemption, this tax advantage is negotiable and can change from year to year. The custodial spouse can waive his or her right to the exemption, allowing the noncustodial spouse to claim it.

Tax Credits

Claiming a child as a dependent may impact other tax benefits. For example, if a child is attending college, the spouse who claims the student as a dependent is generally entitled to claim either the American Opportunity Tax Credit or the Lifetime Learning tax credit for tuition paid, assuming eligibility requirements are met. The law also allows a child tax credit of up to $1,000 annually for each qualifying dependent child under age 17.

Alimony vs. Child Support

Payments that qualify as alimony under the tax law are deductible by the paying spouse and are considered taxable income to the recipient spouse. Child support payments, on the other hand, are not deductible by the paying spouse and are not included in the recipient spouse’s income. The IRS characterizes payments that are linked to an event or date relating to a child — such as high school graduation or a 21st birthday — as child support rather than alimony. You can contact divorce attorney in Pensacola for any concerns related to the custody of your child.

These are just some of the tax planning issues that could be important in a divorce situation. Give us a call, as always, we’re available for planning assistance.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

To settle disputes within a family contact Fresno family lawyers for complete legal support.

Maximizing Value When Selling a Practice

Dentistry iQ details a number of strategies and money-saving insights to help maximize the value of a dental practice upon sale, underscoring the importance of recognizing that a practice is not taxed as one entity but contains several different kinds of assets including equipment, supplies, real estate, practice goodwill and patient records. Each practice asset necessitates discrete accounting and tax rules because the IRS has established different depreciation and time factors for each one.

Why You Need an Appraisal Before You Donate Property

If you wish to donate noncash property valued at more than $5,000 to a charitable organization, you’ll generally have to obtain a qualified appraisal that meets IRS guidelines. An appraiser typically will use an item’s fair market value (FMV) as the basis for valuation. FMV is the price the property would sell for on the open market has given a willing buyer and a willing seller, no compulsion to buy or sell, and a reasonable knowledge of the relevant facts.

You’ll be responsible for providing the IRS with information that supports your right to deduct the charitable contribution. In most cases, this will be an “appraisal summary” on an IRS form attached to your tax return. You’ll have to attach a copy of the appraisal for gifts of art valued at $20,000 or more and for all gifts of property valued at more than $500,000, not including inventory, publicly traded stock, and intellectual property.

If you make gifts of two or more items in the same tax year — whether to one or multiple donees — the values of all property in the same category should be added together to determine if the $5,000 limit is exceeded.

The appraisal must be received before your income-tax return is due. It must be signed, dated, and made no earlier than 60 days before you donate the appraised property.

Qualified Appraisal Requirement: The Exceptions

Certain contributions don’t require a qualified appraisal. These include:

A car, boat, or airplane for which the deduction is limited to the charity’s gross proceeds on the property’s sale

Stock in trade, inventory, or property held primarily for sale to customers in the regular course of business

Publicly traded securities for which market quotations are readily available

The qualified intellectual property, such as a patent

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).