Huddleston Tax Weekly

On your personal form 1040 you may only deduct charitable contributions if you itemized your deductions (use Schedule A).  In order for the contribution to be deductibe it must be made to a qualified charitable organization. 

When contributing cash you must maintain a record of the contribution.  This record can be in the form of a cancelled check, a letter from the donee organization, or other written record.  It should contain the amount of the contribution, date, and name of the organization.

Any donation the entitles you to merchandise, goods, or services, including admission to events like banquets or sporting events, you can deduct only the amount that exceeds the fairm market value of the benefit received.  For example - if you make a purchase of some football tickets at a silent auction fund raiser for $50 and the tickets have a fair market value of $30, then only $20 is deductible as a chartiable contribution on your tax return. 

For any contribution that exceeds $250 you must keep in your records a contenporaneous writeen acknowledgement from the organization you donated to indicating the aount of the contribution or a description of the donated item, as well as whether or not the organization provided any goods or services in exchange. 

If you non-cash donations total more than $500 then you must fill out form 8283 with your personal form 1040.  If you are claming a non-cash donation in excess of $5,000 then you generally will be required to obtain an appraisal of your contribution.

For business owners with questions about deducting expenses for travel, meals, entertainment, and gifts, here is a small overview.  Generally meals and entertainment are deductible as long as they are ordinary and necessary expenses that are directly business related.  An ordinary expense is one that is common and accepted in the taxpayers trade or business.  A necessary expenses is one that is appropriate for business.  Also remember that generally only 50% of meals and entertainment can be deducted.

For travel, when taxpayers are away from home on business they may deduct the travel related expenses.  This includes the cost to get to their desination (airplane ticket, gas, rental car, etc.), the cost of lodging, and the cost of meals.  To qualify as travel away from home they work duties must take longer than one day.  Meals are still subject to a 50% limitation even when traveling away from home.

When it comes to gifts, taxpayers are often able to deduct some or all of the expense of gifts given during the course of their business.  Generally a deduction for a gift is limited to $25 per person per tax year. 

This is just a quick overview of deducting travel, entertainment, gifts, and meals.  If you have further questions about the deductibility of any of these items it is always a good idea to contact your tax professional.

For business owners with questions about deducting expenses for travel, meals, entertainment, and gifts, here is a small overview.  Generally meals and entertainment are deductible as long as they are ordinary and necessary expenses that are directly business related.  An ordinary expense is one that is common and accepted in the taxpayers trade or business.  A necessary expenses is one that is appropriate for business.  Also remember that generally only 50% of meals and entertainment can be deducted.

For travel, when taxpayers are away from home on business they may deduct the travel related expenses.  This includes the cost to get to their desination (airplane ticket, gas, rental car, etc.), the cost of lodging, and the cost of meals.  To qualify as travel away from home they work duties must take longer than one day.  Meals are still subject to a 50% limitation even when traveling away from home.

When it comes to gifts, taxpayers are often able to deduct some or all of the expense of gifts given during the course of their business.  Generally a deduction for a gift is limited to $25 per person per tax year. 

This is just a quick overview of deducting travel, entertainment, gifts, and meals.  If you have further questions about the deductibility of any of these items it is always a good idea to contact your tax professional.

Individual 1040’s: 

On October 15th all Individual tax returns (form 1040) are due to be filed with the IRS.  If you fail to file your return by the October 15th deadline you will be subject to a late filing penalty.  The late filing penalty is usually 5% of the tax due per month with a maximum penatly of 25%.  There is also an additional penalty for late payment of your tax.  Make sure you get your return filed by October 15th in order to avoid penalties.   Even filing one day late results in a penalty of a whole month.

First Time Homebuyer Credit:

The $8000 credit for first time homebuyers is set to expire on December 1st.  If you are currently looking to buy a house and want to get in on this credit you must close on your home by November 30.  It is highly unliking that Congroess will extend this credit.

If you  need help getting your tax return filed or have additional questions about whether or not you qualify for the First Time Homebuyers credit, be sure to consult your tax professional.