Wednesday, June 20, 2012

Making sure the document is right

If you make a large charitable contribution, say a series of weekly checks to your church totaling more than $25,000 in a year, if the church sends you one or several letters acknowledging the gifts, and if you keep meticulous records, including copies of the cancelled checks, you are in the clear on taking a  deduction if the IRS chooses to audit you, right? You would think so.

As described by the Rehmann Group's BWD Express publication, a recent Tax Court case involving David and Veronica Durden upheld an IRS disallowance of the deduction. The problems:
  • The church's January 2008 letter acknowledging the 2007 gifts did not include the required statement as to whether the taxpayer received anything of value in return for the gift. 
  • After this deficiency was pointed out by the IRS, a letter sent by the church in 2009 including the required language was not considered because it was not sent "contemporaneously" with the gift. Under the regulations, the letter (with the required statements) needs to be sent by the date that the taxpayer files his return, or is required to file his return, to be considered contemporaneous. 
Rehmann notes that taxpayers cannot simply rely on their charitable beneficiaries to know what the documentation requirements are.

Tuesday, June 12, 2012

Social Security information online

The Social Security Adminstration has announced that it will no longer send an annual statement to workers to list the earnings that have been reported on their social security numbers and to provide a projection of the levels of benefits.

Instead, it now offers an online service called My Statement. In addition to the information previously contained in the paper statement, it will give the registered visitor links to submit an application for benefits online.

The site also has other calculators which will help with estimating benefits for those who may not qualify for social security based on their earnings history.

Previously: We can help with Social Security Planning.