Charitable Giving, IRS Audit Help

Political Contributions and IRS Audit Help

It is election time again and everybody has their hand out. They want your money. They want your contribution. That is natural. We are a nation of givers. Some are more generous than others. And the INTERNAL REVENUE SERVICE knows that some of you also tell tall tales when it comes to your deduction for charitable contributions. A few bad apples have spoiled it for everyone. That means you need to be sure to document your deductions. Safeguard yourself with record keeping and keep it handy in case you need IRS audit help. That might sound boring now, but how glad will you be when your return is audited and you have EVERYTHING you need to keep form owing more tax.   So back to contributions. Not every contribution is deductible. But don’t let that stop you from giving to someone in need. If you want to keep it just between you and God, and don’t have the receipts to support your deduction, then keep this donation from the Internal Revenue Service, too, and leave it off your return.   We just had our primary elections to determine who will be on the ballot in November. One candidate for the Arizona State Senate spent multiple millions of dollars. And he lost! Everyone is asking for money. But you need to know this: contributions to political candidates and political campaigns are NOT deductible. Those $1000 a plate dinners are NOT deductible.   Don’t let the tax laws rule your life. Just let the tax laws rule your tax return. Don’t let the tax laws keep you from giving where you want to give. Just know when it can go on your income tax return and when it cannot.   You can check the box on the front of your 1040 to say “YES!” I want to give $3 to the Presidential Election Campaign Fund. Both taxpayer and spouse can each decide to check their box or not. One of you can check the box and the other can leave it blank. Checking these boxes does not increase your tax nor does it decrease your refund. It comes out of the tax you will have already paid on this particular tax return. It is also not deductible. It is not your money. You’ve already given it to the IRS and I tell my clients, “It is the only money you can tell the government how to spend.” 🙂   Just what is a contribution? It is a donation or a gift made voluntarily with no expectation of receiving anything in return. It is a donation or gift to a qualifying organization to be used by a qualifying organization. You must itemize your deductions on Schedule A of the Form 1040 Individual Income Tax Return in order to claim these deductions. But don’t let the requirement to itemize keep you from giving where you feel moved to give.   How do you know if yours is a qualifying organization? The IRS has a list of most of them in their Publication 78 found at www.irs.gov. You can search by the organization name, city and state. It is easiest to search if you know the EIN or Entity Identification Number of the organization. If they have a number, they were qualified once. If they are still on the IRS list, and you have your proof of giving, then you can safely claim that deduction.   So when you send an extra check to the IRS to help pay the Public Debt, or when we check the box on the Arizona State tax return to give to the “I didn’t pay enough” fund, those are deductible contributions!   You also need to document your donations. In our voluntary system of reporting our income and deductions, you must be able to prove you really did make that gift.  When you give cash, you will want to get a receipt to verify your cash contribution. Can you get a receipt from the Salvation Army Kettle Bell Ringer? Keep a log of your donations. Write a check, use a credit card, get that written verification.   For further information, you can click here to read my blogpost “Charitable Giving Can Give Rise to a Deduction”.   To you lowest legal tax, Nellie Williams, EA Bullet Proof Your Taxes   Image: FreeDigitalPhotos.net