As 2018 comes to a close, people are starting to think about that dreaded time of the year better known as tax season. Whether you get a refund, have to pay additional taxes, file early, or file at 11:59 p.m. on April 15, you will soon be gathering up supporting documents to file taxes.
Lori Criswell, of Lori Criswell & Associates P.C., recently spoke with The Blount Countian and said that some comprehensive tax law changes took place this year. Criswell offered some end-of-year tax tips to help ease the painstaking task of filing.
• First and foremost, make sure the contribution you make is to a qualified charity such as a church or one that maintains a 501(c)3 status.
• For monetary donations of $250 or more, you will need to have an acknowledgement, such as a letter or receipt to document your contribution. Donations under $250 can be documented by a cancelled check. Example – If you donate $100 each week to church and then give a $500 donation, you can use your cancelled checks for the $100 weekly donations, but you will have to have an acknowledgement of some type for the $500 donation.
• If you donate cash by just dropping it in the offering plate at church, you will need to use the envelopes provided to get an acknowledgement of the donation. Simply stating that you made cash contributions will not suffice as proof. It must be documented. Again, if you donate by check, it will serve as documentation as long as it is under $250.
• For those who buy raffle tickets, keep the receipt stub as documentation.
• Any non-cash contributions, such as clothing or goods donated to a thrift store, will need an acknowledgement letter or receipt to properly claim the donation. When claiming the monetary amount, be sure to adhere to IRS guidelines.
• Any donation executed Dec. 31 can be claimed for the upcoming tax season. Example – If you donate money by check on Dec. 31, but the check is not cashed until after Jan. 1, you can still claim the donation for this year because the donation was executed prior to the end of the year.
Criswell said that auditors are looking heavily for appropriate documentation when donations have been claimed.
Other suggestions offered by Criswell include:
• Consider itemizing on the state return. Many people are simply using the standard deduction for both federal and state. While the federal deductions have increased, it may be more advantageous to itemize your state return.
• Anyone more than 70½ years of age that has an IRA must take minimum distributions from their account. Ask your tax preparer about a QCD or Qualified Charitable Distribution. This allows a person to authorize the minimum distribution to be sent directly to a qualified charity. If done correctly, the money won’t count as taxable income, thus eliminating taxes on that amount. Filers, however, will not be able to receive a charitable contribution deduction if they choose this option.
While these tips represent a few of the changes in 2018, now is the time to be maximizing any benefits offered under the tax laws.