search-nav-label.jpg

Visit Our Blogs

fba-ss7Tap into our CPAs' expertise! 
Our blogs.

 

Federal Tax

One Year Tax Extenders Package Passed in the Senate

Just in time for year-end tax planning, the Senate passed the tax extenders bill by vote of 76 to 16 on Tuesday, December 16. As discussed in our previous post, this bill includes many previously expired tax provisions that will be extended through December 31, 2014. The bill will be sent to the President for his signature and is expected to be signed into law quickly. 

An Alternative to Capital Gains Taxes: Donating Stock to Charity

This time of year many individual taxpayers are seeking ways to reduce their 2014 tax bill with April right around the corner. It is no secret tax rates have increased beginning January 1, 2013 leaving some with an uncomfortable reality last April. Plus, many previous beneficial tax provisions have expired on December 31, 2013 and without an extension by Congress*, tax preparers and clients alike are left searching for alternatives to reduce their tax liabilities.

Rest easy, there is one tax planning strategy that can realize the appreciation, increase your itemized deductions and reduce your tax bill all at the same time. Taxpayers are eligible to take a charitable deduction for contributions of long term capital gain property to qualified charities.

Long term capital gain property would include stocks, mutual fund shares, real estate held for investment and a few other similar types of investments held longer than one year. Many people make cash contributions to their favorite charities throughout the year, but instead of cash, you could donate stock at its fair market value and accomplish a similar deduction. This planning tip is effective because it alleviates the need to sell the security in your portfolio and pay capital gains tax on the appreciation above your historical cost basis then to later make a cash contribution to the charity. In other words, you can skip the sale of the security and make the contribution of the security directly to the qualified charity. Many qualified charities are capable of receiving this type of property just as easily as the charity would receive a cash contribution.

IRS Releases New Standard Mileage Rates for 2015

The IRS has issued the 2015 standard mileage rates. The new rates go into effect beginning January 1, 2015 and are as follows:

  • 57.5 cents per mile for business miles driven.
  • 23 cents per mile driven for medical or moving purposes.
  • 14 cents per mile driven for charitable purposes.

Tips for Year-End Charitable Contributions

The IRS has issued a news release (IR 2014-110) to remind taxpayers of the important tax law rules and documentation requirements that they should follow when making donations to charity.


Rules for donations of clothing and household items. To be deductible, clothing and household items donated to charity must be in good used condition or better. Clothing or household items (e.g., furniture, furnishings, electronics, appliances, and linens) for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Be aware of this rule and the value you intend to claim before you make the donation. In practice, this is a burden that few taxpayers are willing to bear, which can result in them receiving no benefit at all. Donors must get a written acknowledgment from the charity for all gifts worth $250 or more that includes the name of the charity, date of the contribution and a description of the items contributed. In practice you should have this receipt for all donations of property. If a donation is left at a charity's unattended drop site, you should keep a written record of the donation that includes this information. It is good practice to take pictures of your items to substantiate their condition as well as their existence. Make an itemized list of your contribution and note the value of each item prior to making the donation. Receipts that have generic listings like “3 bags of clothes: $500” have been disallowed due to a lack of detail that is considered a lack of substantiation by IRS.

One Year Tax Extenders Package Passed in House

taxformOn Wednesday, the House overwhelmingly passed a bill that will extend, for one year, a package of tax provisions into 2014. Though the year is almost over, these breaks had all previously expired as of December 31, 2013, and under this bill they will be extended through December 31, 2014. There has been considerable debate over the content of this package, and whether to pass a one-year extension or two. Last week, President Obama threatened to veto a two-year extension, so there is hope that this one-year extension will work instead. If the House and the Senate pass the bill, it is likely that the President will sign it into law.

The bill covers a host of provisions typically referred to as “tax extenders” as they are temporary tax breaks that need to be renewed every year or so. Though the bill has not yet passed into law, it is worth listing out some of the major provisions. Some highlights of the bill are listed below:

Individual Provisions (many are subject to income limits)

• $250 above-the-line deduction for teacher’s classroom expenses
• employer-provided mass transit benefits are increased to equal employer-provided parking benefits
• mortgage insurance premiums allowed as a deduction
• state and local sales taxes can be deducted in lieu of state and local income taxes
• tuition and fees can be deducted above-the-line
• tax-free distributions from IRAs directly to charities for those over 70 ½ years old

© 2009 Bond Beebe.  All rights reserved.  Privacy Policy | Employee Logon | Site by Marketri