Deduction for Charitable Contributions - Without Itemizing


Charitable Deductions

New flash: On your 2020 tax return you may be able to deduct some charitable contributions even if you don't itemize deductions on your tax return. This is good news for those that don't benefit from using schedule A to itemize their deductions. Typically taxpayers don't use schedule A to itemize their deductions unless they have mortgage interest they can deduct in addition to real estate taxes and charitable contributions. In some rare cases individuals that have a lot of medical expenses (paid out of their own pocket) will itemize deductions also. And with a higher standard deduction starting with 2019 tax returns the number of people who used schedule A to itemize their deductions were greatly reduced. But now even if you don't use schedule A to itemize their deductions you may be able to deduct some of your charitable contributions.

In IR-202-264 the IRS announced:

Following special tax law changes made earlier this year, cash donations of up to $300 made before December 31, 2020, are now deductible when people file their taxes in 2021.

Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify for this new tax deduction. In tax-year 2018, the most recent year for which complete figures are available, more than 134 million taxpayers claimed the standard deduction, just over 87% of all filers.

Under this new change, individual taxpayers can claim an "above-the-line" deduction of up to $300 for cash donations made to charity during 2020. This means the deduction lowers both adjusted gross income and taxable income – translating into tax savings for those making donations to qualifying tax-exempt organizations.

You will need to make sure that the charity is eligible for tax-deductible donations. Additionally, the IRS advises the following about cash donations and keep good records:

Cash donations include those made by check, credit card or debit card. They don't include securities, household items or other property. Though cash contributions to most charitable organizations qualify, some do not. Check Publication 526, Charitable Contributions, and the TEOS for more information.

Though cash contributions to most charitable organizations qualify, those made to supporting organizations and donor-advised funds do not.

The IRS reminds everyone giving to charity to be sure to keep good records. By law, special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining a receipt or acknowledgement letter from the charity, before filing a return, and retaining a cancelled check or credit card receipt. For details on these recordkeeping rules, see Publication 526, available on IRS.gov.

Realize to that there are penalties for overstating charitable contributions. 

What About Different Amounts Allowed for Different Filing Statuses?

There should be a larger allowance for a married couple than for an individual, but at this time the limit is $300 regardless of filing status. Subject to change, of course.

2020 Tax Returns

Tax returns will be more complicated for 2020. If you need the help of the CPA Superhero with your taxes this year I am willing to help you. I have clients all over the U.S. and in many foreign countries and for years my clients have been sending me their tax information digitally and we communicate via phone calls, emails, and video conferencing so the pandemic protocols are nothing new to me. I would be happy to help in this complex tax season. Contact me today using my email below to arrange an initial call to discuss your situation. 

I also help people with IRS issues like back taxes and making arrangements to pay back taxes and in some cases settling them for less than what is due. If you need help with any of these types of issues please also contact me using my email below. 



Posts - 2020 Tax Returns







Posts - IRS Collection Issues and Options:







Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

Jeff Haywood, CPA
The CPA Superhero
jeff.jhtaxes@gmail.com






Posts - 2020 Tax Returns


Posts - IRS Collection Issues and Options:







Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

The 2020 tax season is shaping up to be really complicated

 


The 2020 Tax Season

There was a lot of tax legislation that was passed in 2020 due to the pandemic. The changes are many and it is going to mean that this tax season will be really complicated. Because of the pandemic legislation tax preparers are going to be asking more questions of their clients and spending more time preparing tax returns. To give you an idea here is a list of some of the question I expect to asking clients this year. And these are in addition to the questions that we had to ask the prior year. Here is a sample of what we are looking at:

Client Questions for Tax Changes Impacting 2020 Tax Returns

Did you receive a PPP loan?

Did you include the loan proceeds in the Gross Revenue number for your business?

Did you include the business expenses that you paid with the PPP loan proceeds?


Did you receive a Recovery Rebate (Stimulus Payment)?

If so for how much?


Did you take a withdraw from your retirement account in 2020?

Was that a withdraw or a loan?

Was is a disaster related distribution?


Were you COVID-19 impacted in 2020?

If so were you self-employed at the time?


Did you make charitable contributions in 2020?

If so you may get a deduction for charitable contributions in 2020 even if you don't itemize your deductions.


Were any of your social security taxes deferred?


Did you have Cancellation of Debt Income? 1099-C


Did you have any Cybercurrency transactions in 2020?


Did you receive unemployment benefits in 2020?


Additional Complications

These are additional questions just based on the tax legislation that was passed for 2020. There will be additional forms to prepare this year for reconciling the recovery rebate (stimulus payments) and perhaps even requiring 2019 tax returns to calculate the correct recovery rebate amount. There may be additional forms for retirement distributions and credits for COVID-19 impacted self employed taxpayers. 

The above list doesn't address changes to Cancellation of Debt income, treatment of Net Operating Losses, Educators cost of PPE, and changes to meals expense, 

Then another aside is the legislation for business loans and credits like PPP loans, and the Employee Retention Credits. Special treatment of NOLs for farmers. Exceptions to the 10% early withdraw penalty for retirement accounts, and the ability to recontribute distributions. 

I wrote this to help me prepare my engagement letter for this year and to hopefully spur you to question what will be the implications for your tax returns. If you need the help of the CPA Superhero with your taxes this year, they will be much more complicated and I am willing to help you. I have clients all over the U.S. and in many foreign countries and for years my clients have been sending me their tax information digitally and we communicate via phone calls, emails, and video conferencing so the pandemic protocols are nothing new to me. I would be happy to help in this complex tax season. Contact me today using my email below to arrange an initial call to discuss your situation. 

I also help people with IRS issues like back taxes and making arrangements to pay back taxes and in some cases settling them for less than what is due. If you need help with any of these types of issues please also contact me using my email below. 



Jeff Haywood, CPA
The CPA Superhero
jeff.jhtaxes@gmail.com






Posts - IRS Collection Issues and Options:







Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

Are You Tired of Being Afraid of the IRS?


The CPA Superhero loves to help people in distress over their tax situation. Life happens to people and even good people get behind with filing their tax returns and or paying their taxes. I can help you to get rid of that fear by moving forward with getting into compliance with the IRS. Every year I help people get caught up with filing tax returns and paying taxes. Yes, the IRS is ramping up their efforts to get people who haven't filed or paid or both but you can stop being afraid by contacting me today about moving forward with getting those returns filed and developing a strategy for paying your taxes. 

So let's getting going to get you out of the IRS bullseye. There are options and strategies we can pursue to get this behind you so you can focus on positive possibilities in your life. 

You may qualify for IRS programs that can help you pay or settle your tax debts with the IRS including an Offer in Compromise, and Installment Agreement, or other resolution options. The hardest part is making the call, or in this case sending me an email to arrange an initial call to discuss your situation. So start now by emailing at jeff.jhtaxes@gmail.com to arrange an appointment  for that call via telephone, Zoom, Whatsapp or other options. 



Jeff Haywood, CPA
The CPA Superhero
jeff.jhtaxes@gmail.com






Posts - IRS Collection Issues and Options:







Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

Still Haven't Received Your Refund from Your 2019 Tax Return - What Should You Do?

I have had more calls about not seeing refunds from 2019 tax returns submitted last year. Mind you, none of these calls have been from my clients. People who live in the small town where my office is located evidently have had this issue and maybe you have too. So what should you do?

First, I would start with irs.gov "Where is My Refund?". If you can't or don't want to do that you can call the IRS at 1-800-829-4477. If the response is "what refund" then you should verify with your tax preparer that they filed the return electronically. If they did and the IRS doesn't have it, which I have not heard of, then you can file a duplicate return and mark clearly across the top of it "Possible Duplicate".  At this point my biggest concern would be if someone filed a return using your social security number before your return that you had prepared got filed. Make sure you ask about this when you talk to the IRS. 

Other than an identity theft issue the other concern is did your preparer actually file your return? If your preparer filed your return electronically, was it accepted by the IRS. Your preparer should be able to provide documentation that it was accepted. If your preparer failed to efile it or did not catch that your return was rejected by the IRS then your preparer should help you figure out what happened and what the necessary action is. 

If you have pursued this with my suggestions above and still don't know what happened and want some help getting to the bottom of it then I can help you if your refund is large enough to make it worth your while to pay me for my help. Really though, contacting the IRS and then your preparer should help you figure out what happened and what to do. If you filed your own return or your preparer is not able or willing to help you then you might want to setup an appointment with me using my email address below.  

If you want my help in figuring out what happened to your tax refund then contact me using my email address below to arrange a conversation via the phone, Zoom, or Whatsapp. With the pandemic I am not seeing anyone in person this year, so send me an email to schedule an appointment  for a conversation over the phone or via something like Zoom or Whatsapp.


Jeff Haywood, CPA
The CPA Superhero
jeff.jhtaxes@gmail.com






Posts - IRS Collection Issues and Options:







Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

bAD DEBT Expense

Hear me out please. I am going to address bad debt expense to clear up a common misconception and hopefully I can write this an understandab...