Because it isn’t what you think it is…

Individuals!

In Washington DC, there is a holiday called Emancipation Day.  This year, it falls on Friday, April 15.  Due to this, the basic federal income tax deadline has been changed to Monday, April 18.  Most states will follow suit, just because it is easier to have the same deadline. This is a one-time change.

Businesses!

Beginning next year, for the 2016 federal income tax filings happening in 2017, the due dates for some forms will change.  This is a permanent change!  Here’s the list:

Okay, business owners, here we go! Your favorite task of the year:  1099s!

What is the dollar limit?

If total payment for the year is $600 or more, issue a 1099.

If total payment for the year is under $600, ignore the 1099.

Who might get a 1099?

Anyone who provided a service for you in 2012.

Here is a list of common services.  The list is not complete. Contact me if you are unsure.

An alternative to New Year Resolutions

It’s that time again!  Many of us are tempted to make a pile of well-intentioned resolutions.  But I beg of you:  please!  Stop!  Don’t do it!

Consider this:  Has it worked in the past?  Or are your resolutions gone and forgotten within anywhere from 10 days to 6 weeks as so many studies tell us?  Remember Einstein’s famous definition of insanity:  Doing the same thing over and over, but expecting a different result.

Instead, I recommend a simple 2-step exercise.  You can spend 5 minutes on it, or 20, or call me and ask me to walk you through it.  You don’t need to write anything down, but I always think that helps.

No act of kindness, no matter how small, is ever wasted. – Aesop

What’s left?  How about really big stuff, like cars!

You hear it on the radio all the time.  Various charities trying to outdo one another in the attempt to get you to let them have your old car.  How does that work, anyway?  Is it really worthwhile?

I can’t speak to the value to the individual organization. Are they really turning clunkers into cash? Or is it just some kind of keep busy activity for a certain segment of their population? Once again, I’m not a sociologist, and I’m not worried about it. As long as your paperwork is in order, you don’t have to worry about it, either.  Keep reading!

Charity begins at home, but should not end there. – Thomas Fuller

In addition to money, many people give ‘stuff’.  Used clothing.  Outgrown toys.  The old couch.  As with money, as long as you give it to a qualifying organization, ‘stuff’ can qualify as a charitable contribution and be taken as a deduction on your income taxes.

Many people give their used stuff to Goodwill.  I think this is because the folks at Goodwill Industries have gone out of their way to make it easy for us to find them.  There are many other organizations that accept donations of stuff.  There is one that is very good at sending a truck to pick up, but according to my clients, fairly bad at providing any kind of receipt.  Be careful.

Ask not what your country can do for you, ask what you can do for your country. – John F. Kennedy

What exactly is a 501c3 organization?

This is IRS code for a properly registered and functioning charitable organization here in the United States of America.  You can look up most IRS qualifying charities with their Exempt Organizations Select tool.  “Most” is as close as you can get because a) the list is ever-changing, b) not all churches are registered because they are automatically tax exempt, and c) governmental units don’t have to register.

Real charities issue receipts, or acknowledgement letters, often disguised as mushy thank you notes.  The letter needs to specifically state the value of your charitable donation.  It needs to state something like “no goods or services were received in exchange for the donation.”  If possible, it will also state that the organization is a 501c3 organization.  Oh – and it has to have a date, and be issued before the taxes are due.

We make a living by what we get, but we make a life by what we give. – Winston Churchill

It happens every tax season.  I ask a new taxpayer about their charity, and I get, “Put me down for the maximum.”  Folks, I hate to have to tell you this, but there is no maximum.  There is no standard amount for charity that you can just use as a default, absent of any documentation or even actual giving.  I confess I sometimes wonder if it might be years and years of systematic abuse of line 19 that has driven the IRS to such nitpicking specificity for the documentation of this one deduction.

Let’s start at the beginning.

Here in the USA, a lot of taxes are paid, and in a variety of ways.  For income taxes, folks are still allowed a deduction for charitable giving.  This deduction is taken on Schedule A, lines 16, 17, 18 and 19.

It’s better to give than to receive.
– My mother (and possibly yours), transliterating Acts 20:35

Charity is people with more than they need, giving that ‘more’ to other people who don’t have enough.  Charity is recognizing that no matter how high you push the thermostat, you aren’t going to get more comfortable; no matter what you pay for your steak, the plate will be clean in 20 minutes; no matter how much gas your vehicle guzzles, the tank will soon be empty, and furthermore, recognizing there are plenty of other people with no heat, no food, and no way to get around – and then giving of your own time and/or money to do something about it.

Charity is sharing.