  PO Box 2214 Oregon City OR 97045 503-656-0699 |
|
Date last modified:
10/29/07 |
May 2007 Newsletter New Rules Govern Charitable Contributions Beginning in 2007, taxpayers will need to support all charitable contributions with IRS-specified records. Canceled checks, detailed receipts and acknowledgement letters are deemed acceptable; personal logs are not adequate by themselves. Cash contributions must be substantiated with a receipt if you wish to deduct them on your tax return.Receipts and acknowledgement letters from the organizations receiving your donations must include the organization’s full and official name, the date of your contribution and the amount. Letters requesting a donation or pledge are not considered receipt of a gift. Your "proof" must clearly indicate the organization has actually received the donation. Single gifts over $250.00 must be acknowledged with a communication from the charity stating the amount and date of the gift. The charity must also report whether any goods or services were provided to you, the donor. If so, the value of what you received must be stated, reducing your deduction. What will we want from you to prepare your taxes? We can use a log that you prepare from your receipts. The log needs to include the name of the organization, the date of the gift and the amount. If we have questions, we may ask to see your proof. Rules regarding non-cash contributions (clothing, household goods, etc.) are also being tightened. The law states you may claim a charitable contribution only for items in "good, used condition or better". Our advice is to cast a critical eye at your donations and claim a deduction for those items that are truly usable if sold in a thrift shop.Get a receipt when you drop off your used goods and attach your detailed list of what was given. "One bag of clothing" is not considered adequate information. Donors are required to determine a value for tax purposes. Use the guide on our website www.mrbilltaxman.com/noncashdonations.htm or the Salvation Army’s at www.satruck.com/ValueGuide.aspx . In addition to a list of donated items, you can take photographs for additional documentation.Single items you value at $500 and over must be appraised by a qualified, unrelated party in order to substantiate the donation. Vehicle donations are valued by the receiving organization. The deduction you claim depends on how the donated vehicle is used by the organization. Generally, the maximum deduction is $500 unless the receiving organization documents a higher donation amount. To answer a question clients often ask, there is no maximum or minimum amount for charitable contributions. You must have documentation to support all contributions claimed. When total non-cash contributions are valued at $500 and over, a separate tax form must be filed.We don’t want to discourage anyone from making charitable contributions, but the new rules may require we ask more questions of you. If you have questions, please contact us. Remember that Oregon taxpayers can choose to directly donate a portion of their tax refund to one or more specified charitable organizations. Ask us about this program!
Tax Credits for "Green"PurchasesMost taxpayers are aware there are tax incentives for certain energy-saving improvements and purchases. We are providing a brief summary of the pertinent facts. Contact us if you have questions! 2007 is scheduled to be the final year for the federal energy credits for homeowners. Credits are available for certain windows, doors, roofs, insulation systems, circulating fans, furnaces, heat pumps, air conditioners and boilers. To qualify, items must meet certain performance and quality standards, and must be original installations in your primary residence. Before purchasing, ask your vendor if the item qualifies for a federal energy credit. A "Manufacturer’s Certification Statement" may be required to document the credit on your tax return. For more information on specific qualifications, refer to www.energystar.gov/index.cfm?c=products.pr_tax_credits . For your taxes, we will want to see your purchase receipt, detailing the energy saving features of your purchase. Federal tax credits are also available for Alternative Motor Vehicle purchases, including hybrid cars. Credits for individual models phase out after a certain number are sold. If the credit is a deciding factor in which model to purchase, ask the salesperson to check with the manufacturer. Information is also at: www.fueleconomy.gov/feg/tax_hybrid.shtml . We need the model, purchase price and purchase date to take the credit on your taxes.Oregon also offers residential energy and hybrid vehicle tax credits. To claim the state credits, you must apply for them and receive a certificate number before filing your tax return. Do not assume your salesperson is doing this for you! If the credit is important to you, ask your salesperson if the model you are considering qualifies.Credits are available for refrigerators, clothes washers, dishwashers, water heaters, fuel cells, and wind, solar, heating and air conditioning systems. Heat pumps and air conditioning systems must be installed by an Oregon Department of Energy tax credit-certified technician. Refer to the Department of Energy’s website for qualifying models, credit amounts, application form and instructions: http://egov.oregon.gov/ENERGY/CONS/RES/RETC.shtml .Follow a similar process to apply for the state’s hybrid vehicle tax credit: http://egov.oregon.gov/ENERGY/TRANS/hybridcr.shtml .It is definitely worth the time and effort to apply for these credits. They may be worth from $50 to over $1,000 on your return. If you think you have made qualifying purchases in the last three years, we can amend your tax returns. The credits must be taken in the year of purchase. |
