‘Tis the season for making resolutions and setting goals. Try exploring these three areas to dig deeper into QuickBooks Online.
By now, many New Year’s resolutions have already been made – and broken. Though they’re usually created with the best of intentions, they’re often just too ambitious to be realistic.
For example, you might decide to learn more about QuickBooks Online and keep up with your accounting chores more conscientiously in 2019. That’s hard to quantify. How will you know if you achieved that goal?
Instead, why not pick three (or more) specific areas and focus on them this month? We’ll get the ball rolling for you by making some suggestions.
Explore the QuickBooks Online mobile app:
Yes, QuickBooks Online itself is already mobile; you can access it from any computer that has an internet connection and browser. But you probably don’t always lug a laptop around when you’re away from the office, and you’re sometimes at locations were using it wouldn’t be practical. But you can always pull out your smartphone and fire up the QuickBooks Online app, available for both iOS and Android.
No matter how small your smartphone (this image was captured on an iPhone SE), you can still do your accounting tasks using QuickBooks Online’s app.
QuickBooks Online’s app replicates a surprising percentage of the features found on the browser-based version. You can create, view, and edit invoices, estimates, and sales receipts for example, as well as see abbreviated customer and vendor records. Your product and service records are available there, including tools for recording expenses on the road.
Create a budget for one month:
Budgets are intimidating. That’s one reason why some small businesses don’t create them. So instead of trying to estimate what your income and expenses will be for an entire fiscal year, just build a budget for one month. In QuickBooks Online, you’d click the gear icon in the upper right, then select Budgeting. Click Add budget in the upper right to open the New Budget window.
Give it a name, like “February Budget,” and select FY2019. Leave the Interval at Monthly, and open the Pre-fill data? menu to click on Actual data – 2018 (if you have data from last year). Then click Create Budget in the lower right corner. Look at last year’s February numbers and estimate how they might change in 2019. Replace the old numbers with your new ones.
Creating a framework for a budget in QuickBooks Online is easy.
We’re suggesting you try it for just one month, so you get a feel for how this tool works. And that experiment will probably leave you with some questions. We can help you go further and complete an annual budget.
Customize your sales forms:
Every piece of paper and email you send to your customers contributes to their impression of you. Are you presenting an attractive, consistent image of your business to them? QuickBooks Online can help with this. It offers simple (for the most part) tools that allow you to modify the boilerplate forms offered on the site – without being an experienced graphic designer.
Start by clicking on the gear icon in the upper right and selecting Your Company | Custom Form Styles. Unless you’ve done some work in this area before, the screen that opens will have just one listed entry: your Master form, the one that comes standard in QuickBooks Online. To see what you can do, click Edit at the end of that line. Your four options are:
- Design. This section contains links to modifications you can make to your sales forms’ visuals. You can, for example, add a logo or color and change the default fonts.
Want to change your logo or other elements of your sales forms? QuickBooks Online has the tools.
- Content. Do you want to add or remove the standard columns (Date, Quantity, etc.) displayed on your invoices? You can do so by checking and unchecking boxes.
- Emails. QuickBooks Online sends email messages with forms; you can edit them here.
- Payments. This is a reminder that QuickBooks Online supports online payments, which can help you get paid faster.
There’s more you can do to make your sales forms look professional and polished. We can help you with these tools – and any others you want to explore to expand your use of QuickBooks Online. It’s a new year, and who knows what might come your way over the next 12 months? Contact us if you want to prepare for the new accounting challenges that 2019 might present.
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Did you resolve to grow your understanding of QuickBooks Online in 2019? We can help you explore new features.
Go mobile in 2019: Download the QuickBooks Online app for your smartphone. You’d be surprised at how much it can do for you while you’re on the go.
How are things going with your 2019 budget? If you don’t have one yet, let us show you how QuickBooks Online simplifies this critical task.
QuickBooks Online’s sales forms (like invoices) may work fine for you. Do you know, though, how they can be customized to fit the image of your business? Ask us.
It’s a gig economy. QuickBooks Online makes it easy to track and pay independent contractors.
In days past we used to call it “moonlighting” – taking on a second, part-time job for extra money. And we saw how prevalent this became was when millions of people had to resort to side gigs to keep afloat during the economic downturn of a decade ago. Some who had lost full-time employment even turned one or more of these part-time passions into a small business and became independent contractors for other companies.
If you’re thinking of hiring a freelancer to do some of your work, you’ll find that QuickBooks Online can accommodate your accounting needs for them nicely. Since they’re not W-2 workers, your paperwork needs are minimal. They’ll simply fill out an IRS Form W-9 and you’ll pay them for services provided, dispatching 1099-MISCs after the first of each year so they can pay their taxes.
Here’s how it works.
Creating Contractor Records
Warning: Be sure that any independent contractor you hire cannot be considered an actual employee. The IRS spells out the differences very clearly and takes this distinction very seriously. If you have any doubts, we can help you determine your new worker’s status.
You can either let a new contractor complete his or her own profile or do so yourself.
Like you would with anyone you employ, you’ll need to create records for contractors in QuickBooks Online. Click on Workers in the left navigation pane, then Contractors | Add a contractor. In the window that opens, enter the individual’s name and email address. If you want the contractor to complete his or her own profile, click on the box in front of Email this contractor…
Your contractor will receive an email with an invitation to create an Intuit account and enter W-9 information, which will be transmitted to your QuickBooks Online company account. This will make it easy to process 1099s when tax season arrives. He or she will also be able to use QuickBooks Self-Employed, an Intuit website designed for freelancers. We can walk you through how this works.
If you’d rather enter the worker’s contact details yourself, leave the box blank. A vertical panel containing fields for this information will slide out from the right.
Contractors are also considered vendors. So when you create a record for a contractor, it will also appear in your Vendors list in QuickBooks Online. In fact, you can complete a contractor profile by clicking Expenses in the left vertical pane, then Vendors. Click New Vendor in the upper right and fill in the relevant fields there. Be sure to check the box in front of Track payments for 1099. An abbreviated version of your new record will also be available on the Contractors screen as the two are synchronized.
When you create a Vendor record for an independent contractor, be sure to check the Track payments for 1099 box.
Working with Contractors
You’ll notice in the screenshot above that Brenda Cooper had an Opening balance of $2,450 when you created her record. That’s money you already owed her, and for which she had probably sent you an invoice. QuickBooks Online turned that into an Accounts Payable item that you could find in multiple reports and on both the Vendors and Expenses screens. It will be listed as a Bill in reports, though you haven’t actually created one yet.
You have three options here. You can create a Bill and fill in any missing details if you don’t plan to pay Brenda immediately. If you want to send her the money right away, you can either enter an Expense or write a Check. There are many places in QuickBooks Online where you can do the latter two. We think it’s easiest to return to the Contractors screen since you can accomplish all three from there.
The Contractors screen contains links to the three ways you can handle compensation due to a contractor.
Whenever you receive an invoice from a contractor, you can visit this same screen and choose one of the three options.
You’ll have to select a Category for your payment from the list provided in each of these three types of transactions. The Chart of Accounts contains one called Subcontractors, which may or may not work for your purposes.
We strongly encourage you to consult with us as you begin the process of managing independent contractor compensation to deal with this issue as well as others. QuickBooks Online offers multiple ways to get to the same end result, and it can be confusing. Contact us, and we can schedule a consultation.
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Hiring independent contractors? Be sure they should be classified as such, and not employees. We can help you determine how to do this.
QuickBooks Online offers many ways to do the same tasks when you’re working with independent contractors. Here is how we can help you figure this out.
There are three ways to record financial obligations to independent contractors: bill, check, and expense. Do you know the differences? We can help you figure this out.
Though you don’t have the same payroll requirements for contractors as you do employees, it’s very important to get it right. Here are a few ways we can help you with this.
Does your business do work for clients over weeks or months? Consider using QuickBooks Online’s progress invoicing.
Let’s say you’re doing a job or project for a customer that is going to take a long time, but you don’t want to wait until you’re finished to get paid. Or you’ve agreed to let a customer pay for something in multiple payments. QuickBooks can help. You can create an estimate upfront for the work or products and send a series of invoices at different intervals until the bill is paid off. This is called progress invoicing.
Before you can use this tool, you’ll need to make sure it’s turned on. Click the gear icon in the upper right and select Account and Settings. Click the Sales tab. Look for Progress Invoicing in the left column. If that option isn’t On, click the pencil icon in the far-right column and click on the box to create a checkmark and Save it. Then click Done in the lower right corner.
Creating a Template
You’ll need to use a special template for progress invoicing. Click the gear icon again and select Custom Form Styles. In the upper right corner of the screen that opens, click the arrow next to New Style and select Invoice to open the design window. Replace the template name with a descriptive one and click Airy Classic to select it.
You’ll need to select the Airy Classic template and give it a descriptive name.
There are other options on this page – lots of them. You can add a logo, change fonts and colors, and even modify the content on the invoice. Talk to us if you want to explore the possibilities.
Your progress invoice needs you to adjust a couple of other things here. Click on Edit print settings. If there is a check-in front of Fit printed form with pay stub in window envelope, uncheck it. Next, click the Content tab, then click the small pencil icon in the second section of the invoice sample over on the right. At the bottom of the left pane, click Show more activity options. Check the box in front of Show progress on line items if you want your progress invoice to display item details. When you’ve made all the changes you want to, click Done.
Estimate to Invoice
QuickBooks can create both invoices and estimates. They’re very similar, and you’ll complete them in the same way, with one obvious exception: In addition to an Estimate date, you can also specify an Expiration date. Click the + sign in the upper right, select Estimate, and fill out the form. Save and close when you’re done.
When your customer has accepted the estimate and you’ve agreed on a payment schedule, you’ll need to know how to create a progress invoice. Click Sales in the navigation bar on the left, then All Sales. Locate your estimate on the list and click Create invoice at the end of the row. This window opens:
You have three options when the time comes to start your progress invoicing.
You’ll choose Remaining total of all lines when you’re ready to send your final invoice. For your first, you can either enter a percentage of each line item or a custom amount for each. If you choose a percentage, QuickBooks will calculate what that number would be and enter it. You’ll be able to specify your custom amounts when the progress invoice actually opens. Click Create invoice.
The invoice that opens will contain the information you provided on the estimate. You’ll notice a new column here, though, labeled Due. Your calculated percentage will appear there if you chose that option. If you indicated that you wanted to enter a custom amount for each line, that field will say $0.00 of [total]. Go down that column and type in the amount you expect to be paid on each line item. When you’ve finished, Save the invoice and send it to your customer. Now it appears in the invoice list, where you can send reminders, receive payment, etc.
You can send as many progress invoices as you’d like until you can finally bill your customer for the Remaining total of all lines. QuickBooks provides a report so you can see the progress of all of your progress invoices at once. Click Reports and scroll down to Sales and customers to run Estimates & Progress Invoicing Summary by Customer.
Progress invoicing is a simple concept, but it requires many steps, as you’ve seen here. And there are other ways to go about it in QuickBooks. We strongly suggest that you let us help you with this task to make sure your invoices are set up correctly – and that you’ve paid in full.
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Do you need to bill customers over time? Let us help you set up progress invoicing.
When you create a progress invoice, you can bill customers for a percentage of what they owe or specify custom amounts. We can help here.
Need to know the status of your progress invoices? Run the Estimates & Progress Invoicing Summary by Customer report. We can show you how.
Did you know when you create an estimate for a customer, you can also set up a payment plan for your work? This is called progress invoicing. We can help show you how.
Every interaction with your customers can enhance your image. Here’s how QuickBooks Online contributes to that.
Getting paid by your customers—on time, and in full—can take some effort on your part. You set smart due dates and enforce them. Price your products and services so they’re both reasonable and profitable. Accept online payments.
But are your invoices working for you here? QuickBooks Online provides sales form templates that you can usually use without modifying. But it also offers tools that support multiple kinds of customization. It helps you shape the content and appearance of your invoices and their accompanying messages to be consistent with your company’s brand.
These may be cosmetic changes, but they can affect the way customers react to communications from you. You have few chances to make an impression, so anything you can do to enhance and personalize every interaction will have impact on their impression of you. Neat, well-designed sales forms convey professionalism and attention to details.
Here’s a look at what you can do.
Unless you use every single field in QuickBooks Online’s default sales form template, your invoices will look sloppier than they might otherwise. The site gives you control over much of the content that your customers will see. To make changes, click the gear icon in the upper right of the screen and select Account and Settings, then Sales. You’ll see Sales form content in the left column. Click on any of the fields to the right to open a more thorough list of options.
QuickBooks Online lets you turn fields on and off in your sales forms and specify other preferences.
Click on the status (On, Off) in the right column to change it. When you’re satisfied with your selections, click Save. Then close that window by clicking the X in the upper right corner.
You have more options than these. Click the gear icon again, and then Your Company | Custom Form Styles. You’ll see that there is already a “master” form. You can either edit it or create a new one. We recommend leaving the master form alone so you always have a clean copy to consult if you get tangled up while you’re working.
Click the down arrow in the New style box in the upper right and select Invoice. In the screen that opens, enter a descriptive name for your template in the field at the top and then click Content. A graphical representation of your invoice will appear in the right pane, grayed out. It’s divided into three sections: header, footer, and table (the middle of the invoice where you describe what you sold). Each displays a small pencil icon on the right side of the screen. Click the one in the middle to make that area more visible.
It’s easy to specify which fields should appear on your invoices, what the labels should say, and how wide space should be.
As you check and uncheck boxes to indicate what content should be included, your invoice on the right will change to reflect your actions. You can Preview PDF by clicking that button in the lower right. When you’re satisfied with the changes you’ve made to all three sections, click on the Design tab.
Changing the Look
You don’t have to be a graphic artist to have QuickBooks Online forms that look attractive and consistent, which highlight your brand. The site provides tools that give you control over the appearance of your invoices, not just their content. Click each link below the Design tab to:
- Choose a template.
- Add your company’s logo.
- Select a color scheme and fonts.
- Change the printer settings to accommodate letterhead, for example.
Choosing Your Words
You have control over the messages that go out with your invoices.
Finally, click the Emails tab. Options here let you customize the emails that are sent to customers along with their invoices. Again, changes you make in the left pane will be reflected in the graphical version on the right side.
When you’ve completed all of your modifications, click Done.
We gave you this whirlwind tour of QuickBooks Online’s invoice customization options so you’d know what was possible. We expect you might need some assistance when you sit down to apply the concepts you’ve learned about to your own company’s sales forms. We’re available to help you present a polished, carefully-crafted image representing your brand to your customers.
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Are you satisfied with the image you convey to customers through your QuickBooks Online sales forms? We can help you make them more customized and effective.
You have few chances to interact directly with your customers. Make sure your QuickBooks Online sales forms convey the image you and your brand deserves.
QuickBooks Online comes with sales form templates that may work for your company, but did you know you have control over their appearance and content?
Your customers pay attention to the sales forms you produce for them. QuickBooks Online lets you improve on the default templates it provides making a better impression to your client.
Estimates—or quotes, or bids—are useful tools when you’re pitching a sale of products or services. Here’s how QuickBooks Online handles them.
Sales estimates are standard procedure in many professions. You wouldn’t authorize a car repair without one. Nor would you OK a remodeling job on your kitchen or a summer’s worth of yard landscaping without knowing what the costs will be upfront.
Estimates don’t have to be formal documents. You could scribble a proposal for products or services and their prices on a paper napkin and have your customer sign it. But as we’ve said before, the quality of your sales documents reflects on your company’s professionalism as well as its image.
QuickBooks Online offers specialized tools to manage this step in the selling process. You can create detailed estimates that the site can easily convert to invoices when you get an approval. And QuickBooks Online reports help you monitor the progress of your quotes. Here’s how it works.
A Dedicated Form
You probably already know how to create an invoice. If so, you shouldn’t have any trouble generating estimates because the forms are very similar. To get started, click the + (plus) sign in the upper right corner of the screen. In the Customers column, click Estimates. A form like this will open:
QuickBooks Online provides a form template for your estimates.
Open the drop-down list in the Customer field and select the correct one (or +Add new).
Note: If you click on +Add new, you’re only required to enter your prospective customer’s name to create an estimate; contact detail, of course, will not appear on the form. You can go back later and complete a customer record, but it’s best to at least enter a physical and email address. Click +Details to open the complete record, then save what you provide there.
The word “Pending” should appear below the Customer field. This refers to the status of your estimate. Click the down arrow to the right of it, then on the down arrow in the small window that opens to see what options you’ll have later. If you want to copy someone else on the estimate, click the small Cc/Bcc link to the right and provide the email address(es).
Enter (or select by clicking on the calendar graphic) the Estimate date. If your offer is only good for a limited period of time, enter an Expiration date; otherwise, leave that field blank. Then go down to the Product/Service grid and select the items for which you’re providing an estimate, one on each line. Fill in the Qty field and check the labeled box if the item is taxable.
If you had created a product record for it already, the other fields should be completed automatically. If not, click +Add new. The Product/Service information pane should slide out from the right side of the screen. Here again, you’re only required to enter a Name, but you should really create the whole record and save it to return to the estimate. If you’ve not been through this process before, we can walk you through it.
You can add a discount to the estimate as either a percentage or a dollar amount in the lower right corner of the screen. You can also edit the customer message that appears in the lower left and attach any files necessary. When you’re done, save the estimate.
You can work with your estimate from the Sales Transactions screen.
If you’re not already there, click the Sales link in the left vertical toolbar, and then the All Sales tab and the Estimates bar. Find your estimate and look at the end of the row, in the Action column. If you want to convert your estimate to an invoice, click Create invoice. In the window that opens, indicate whether you want to invoice:
- A percentage of each line item,
- A custom amount for each line, or,
- The total of all lines.
Look over your invoice when it opens, complete any other fields necessary, and save it. Your estimate’s status has now been changed to Closed, and the new invoice created from it will appear on the Sales Transactions screen. It will also be included in the Estimates By Customer report.
If you can create an invoice, you can create an estimate. The tricky part comes in when you have to amend an estimate before you bill it – or even alter it and resubmit it. If you’re going to be working with estimates extensively, let us help you get it right from the start.
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Does your business ever provide estimates (bids, quotes, etc.) to customers? QuickBooks Online can help you create them.
Did you know that you can add a discount when you create a customer estimate in QuickBooks Online? Ask us about this.
QuickBooks Online can convert an estimate to an invoice with one click, but amending before sending it can be tricky. We can help.
Did you know that QuickBooks Online contains an Estimates By Customer report, so you can easily keep track of their status? Find out more here.
If you are a volunteer board member for a nonprofit organization, one specific issue to keep in mind is the IRS’s trust fund recovery penalty. If any entity — nonprofit or for-profit — fails to properly remit Social Security taxes and/or income taxes withheld from employees’ wages, the IRS will directly approach the organization’s “responsible persons” for the tax payments and a potential 100% penalty… Learn about nonprofit bookkeeping at this Dave Burton article.
In general, the penalty will not be imposed on any unpaid, volunteer member of the board of a tax-exempt organization if the member: (1) is solely serving in an honorary capacity, (2) does not participate in the day-to-day operations of the organization, (3) does not participate in the financial operations of the organization, and (4) does not have actual knowledge of the failure on which the penalty is based.
However, for an active member who has governing responsibilities, it is still important to ask questions about who is handling these tax payments (a staff member, the executive director, a payroll service, an accountant?) and what checks and balances are in effect to make sure no problems arise. Annual reviews or audits may also be helpful to verify compliance.
To learn more about non-profit compliance issues, give us a call today. We look forward to helping your non-profit grow.
…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).v
It was one of the greatest financial bets of all time. Hedge fund manager John Paulson bet big against subprime mortgages ahead of last decade’s financial crisis, earning billions in profits for his funds. It was a gamble that, in the long run, didn’t pay off.
Along with the $4 billion he earned for himself, he nailed a second record-breaking honor when he was slapped with one of the largest personal tax bills in history.
According to people close to the firm, Paulson used a tax provision available at the time to hedge fund managers. After deferring the bulk of taxes on the profits, Paulson’s personal tax bill came due on April 17th when he was required to pay about a billion dollars. This is on top of $500,000 he paid late the year before.
Only one problem.
The sum of his payment surpasses the maximum amount allowable by the IRS for payment by a single taxpayer with a single check. That amount is $99,999,999.
Like many investment managers, Hedge fund managers profit from fees amounting to a percentage of gains generated for their clients. In the case of Paulson & Co. that percentage is 20%.
For years—decades actually—tax authorities allowed hedge funds to defer receipt of this type of income. The reason the IRS permits this deferment of compensation by executives is that it tends to lower the company’s compensation costs, forcing them to pay higher taxes on profits. This offsets income taxes not paid right away by the employees.
Sounds like a win-win situation, right?
Well, maybe not this time.
In the case of offshore hedge funds that don’t pay offsetting U.S. taxes, such as some of those operated by Paulson, the treasury was not on the winning team.
A tax change mandated by Congress in 2008 gave hedge fund managers like Paulson until April 17, 2018 to pay taxes on money accumulated before the law changed. People close to the firm say Paulson turned to his Credit Opportunities fund, which is one of several he operates.
Word has it this fund held about $3.5 billion in assets late last year. The bulk was represented by Paulson’s own interests. He made an initial tax payment late last year by pulling funds from this account. He pulled another $1 billion from the fund and used it for the money due on April 17th.
Guess who was said to be the largest investor in the fund?
The government wants its money, but paying Paulson’s bill might not be easy. He could wire it if he wanted but might prefer paying by check if he’ll earn interest on the money until authorities cash the check. If so, he might have to submit multiple payments because the IRS will only accept a payment of less than $100 million.
He could do that if he can get past the most common problem: fitting such huge numbers onto the appropriate line on a check.
We should all have such problems….
…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).v
There can be no more exciting a time than to go from punching a clock to being your own boss. But starting a business means more than deductible lunch dates and setting your own hours. If you think self-employment means you get to kick back and relax, it won’t happen. Most entrepreneurs will tell you they have never worked harder.
Starting a new business takes time and money. If you do nothing else, begin with a business plan. Your investment of blood, sweat, and tears can pay off for the life of your business—as long as you make prudent choices, and a business plan will help you calculate what you’ll need and how much it will cost.
The money you invest is tax deductible, right?
Well … not always.
Don’t make the mistake of assuming all your startup costs are deductible. As long as your total startup costs are $50,000 or less, the IRS allows you to deduct a limited amount of startup costs, and also organizational costs.
On the other hand, if your startup costs for either area exceed $50,000, your allowable deductions are reduced by that dollar amount. Once you make your first sale, however, you can claim all of your business startup expenses. Read on for details.
What Are Startup Expenses?
These days no business can operate without using some form of technology. Unless you plan to use your 3-year-old laptop to run your online business, you’re going to need to purchase equipment to help facilitate your business. Oh, and you’ll need a smartphone if you want to keep up.
Of course, computers and office equipment would qualify as startup expenses. If you need to rent office space or even a cubicle in a cooperative setting, they would also qualify. However, shelf any plans to stand by the mailbox waiting for your hefty check from the IRS. Neither of these expenses can be deducted until after your first sale, at which time they will be deducted over a period of 15 years.
You can choose to deduct the first $5,000 in your first year of business for startup costs, and another $5,000 for organizational costs. Expenses such as legal fees, corporate filing, DBA, and related expenses fall under this designation, but only if your total startup costs are $50,000 or less. If your expenses were over $55,000 you lose the right to any deduction at all.
Make sure you save all receipts for purchases. The laws change so it’s in your best interest to be aware. Check with your tax professional, who will be aware of the latest IRS tax laws. He or she will advise as to whether your startup expenses qualify for a deduction.
…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).v
Making a donation of artwork to a museum, educational institution, or other qualifying charitable organization can give you an opportunity to share your collection with others and provide you with a charitable income-tax deduction. If such a contribution is among your charitable goals, your first step generally should be to obtain a written appraisal from a qualified source to support your claim.
What Constitutes a Qualified Appraisal?
A qualified appraisal is one that’s made by a qualified appraiser and dated no earlier than 60 days before the date you donate the artwork. Very generally, a qualified appraiser is one who has the education and experience to value the type of property being appraised and who regularly prepares appraisals for a fee.
Typically, the appraisal should include the following:*
- A sufficiently detailed description of the artwork (e.g., size, subject matter, medium, name of artist)
- The authenticity and condition of the artwork
- Any donor restrictions (or the terms of any other agreement) on the disposition or use of the artwork by the charitable organization
- The appraised fair market value of the artwork
- The specific basis for the valuation
- The date (or expected date) of the contribution
Claiming the Deduction
The IRS has certain requirements that must be met in order to claim the deduction for donated artwork. For donations of artwork valued at $20,000 or more, you must attach a complete copy of the signed appraisal to your tax return and be prepared to provide a conforming photograph of the artwork if requested by the IRS. If the artwork has been appraised at $50,000 or more, you can request a Statement of Value for the item from the IRS before filing your return. A copy of the qualified appraisal and a check or money order for $5,700 (for up to three items) must be submitted with your request.
Call us today for more tips on how to ensure you’re getting the most tax benefit out of your donations.
* This is not an exhaustive list.
…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).v
If you want to take a charitable contribution deduction on your income tax return, you need to substantiate your gifts. You must have the charity’s written acknowledgment for any charitable deduction of $250 or more. A canceled check alone isn’t enough to support your deduction.
It’s your responsibility to obtain the charity’s acknowledgment (receipt), and you need to have it when you file your return. The acknowledgment must include:
– The amount of cash you contributed
– A description of any property you gave
– A statement as to whether the charity provided services or goods (a meal or tickets, for example) as full or partial consideration for your donation, plus a description and good faith value estimate of the services or goods
A charity may acknowledge each gift of $250 or more separately, or it may give you a single statement covering all your gifts. The charity does not have to place a value on the property you donate. That’s still up to you.
Also, a charity must provide you with an acknowledgment for a donation of more than $75 that is partially a contribution and partially in exchange for goods and services from the charity. This acknowledgment must:
– Tell you that your deductible contribution amount is the donation minus the value of the goods or services
– Give you a good faith estimate of the value of the goods or services
IRS regulations on substantiating charitable deductions cover two more contribution types:
– Goods Or Services That Don’t Have Substantial Value
A charity doesn’t have to include token items in its acknowledgment. Examples of these items include posters, mugs, and key rings.
– Payroll Deduction Contributions
Donations that employers make on behalf of employees who have signed payroll deduction authorization cards can be a problem because the charity lacks the individual donor information needed to prepare its acknowledgments. To substantiate these payroll deduction contributions, you can use employer documents that show the amount withheld (payroll stubs, W-2 forms, or other employer reports) plus the charity’s pledge card or other documents with a statement that you received no goods or services in exchange for your contribution.
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.