Q & A and Tips on Accounting, Taxes and Personal Finance.

Tax Tidbits

April 13, 2019 | By More

elder-fraudAlthough tax season does not really end until 10/15/19 when that last extended individual tax return is done, the initial first rush will be over by the time you read this. Each season I see various misunderstandings and misconceptions from clients that I believe are quite common and therefore good topics for my articles. Here are just a few from this tax season:

  • Charitable contributions: the donee organization must be a qualified organization and cannot be for the benefit of one individual. GoFundMe is considered a personal gift to an individual or family and therefore not a charitable contribution but also not considered taxable income to the recipient. IRS.gov provides a list of approved qualified organizations.
  • Loss on stock sales: not only is there a $3,000 capital loss limitation each year but if a stock is sold at a loss and the same stock is re-purchased within 30 days, the original loss is deferred and not currently deductible. This can have some unintended, painful consequences at tax time.
  • Actual vs estimate vs allowed: there are certain deductions that seem to lend themselves to “estimates” rather than actual amounts. Donations, auto expense, medical expense, schedule C expenses, these are all expenses that need to be actual and backed up with receipts and/or records. New clients too often tell me to use “the maximum allowed” or “use the same as last year” or “use the number I think is best” or “my prior preparer always provided the amount”. The numbers used in your tax return should be those provided by the taxpayer and not the tax preparer. I have seen devastating consequences for taxpayers that relied on the generous numbers used to prepare their returns.

Taxes are complicated and change regularly but as a taxpayer it is very important that you have a general understanding of your tax return. That large refund might be nice but only if all numbers used are actual and not estimates.

The above is to provide general information. Please see your professional for assistance.

Contributed by Michele Sheerahamed – CPA
Michele Koscielniak CPA, LLC is located in Lake Worth, Florida. For more information or to contact Michele Sheerahamed, visit https://www.michelekcpa.com

Article information should not be used exclusively to make legal, financial or tax decisions. Because laws and rules can change frequently, topics may not always be updated to reflect these changes or may not apply to your unique situation. It’s prudent to seek out the advice of a professional for your specific needs.

Category: Taxes

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