Some of the new tax rules that were provisioned by the IRS put restrictions on income tax deductions on donations, while others were far more liberal and forthcoming. It is therefore important that taxpayers learn of the new rules and the different caveats that may apply. Taxpayers are advice to avoid waiting until April to learn of these new provisions.
The rules for charity donation of items such as clothes, shoes and everyday household items have change. For or an item to Streamyx qualified for tax deduction, it must be in "good used condition or better". The IRS has yet to define what is meant by "good used condition or better", but has promised to issue guidelines as the tax season draws closer. This provision is effective for all items donated August 17, 2006 and onwards.
This new tax rule is the IRS response to what the federal government refers to as signs of abuse - taxpayers claiming exorbitant deductions on used items. In 2003 taxpayers deducted about $9 billion for charitable contributions of clothing and household items on their tax returns.
Taxpayers, however, do Streamyx Adsl have to be brain surgeons to figure out what qualifies as good. Taxpayers will have to take an educated guess and sum up that the old shoes and clothes, which have little or no value, Streamyx do not qualify for deduction.
A good rule would be to deduct the fair market value (value of the item in your local thrift store) of the item. If, for instance, you bought a pair of shoes for $40 dollars, you would have to deduct less than $40 if you used them, irrespective of the fact that you may have wore them only once. A woman's dress may be valued at $4.00 to $19.00 while a man's pants at $3.50 to $10.00 according to the Salvation Army Valuation Guide at satruck.com. Deduction for items (such as underwear and socks) with low monetary value will be denied.
Conversely, if an item is valued more than $500, a deduction may be permitted even if that item is not in "good used condition or better". Adsl Line Rental the taxpayer tax return must be accompanied with a qualified appraisal from the manufacturer, local representative or otherwise; and, in addition, the taxpayer must fill Form 8283.
On a similar note, it is recommended that taxpayers use checks instead of cash when making a taxable contribution to community foundations, churches or other charities; that way, a paper trail is created and taxpayers can use their bank statement as proof of contribution. The IRS will require a receipt for cash contribution and it is critical that you obtain a receipt in order to be qualified for a deduction.
Earnest Young is an Accounting and Tax writer for Accent Accounting & Taxes http://accentaccounting.net
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