GIMME A TAX BREAK

GATHERING DATA ON ITEMIZED DEDUCTIONS

Most of you will be receiving notices in the next couple of weeks as to the amount of your mortgage interest or real estate taxes, if paid through an escrow account.

However, there are many potential itemized deductions which you may not be notified or reminded to list on your personal income tax return.

Some of us are more generous than others when it comes to helping out organized charitable groups. If you have given checks throughout the year to various charities, I would recommend that you go through your checkbook register and highlight the check number, payee and amount of the various checks.

Then, either prepare a brief excel spread sheet showing the date, check number and amount, or run a tape of the total charitable gifts. Please remember that you need a cancelled check to prove the donation and, if the amount is in excess of $250, you need a letter from the charity stating the amount and the fact that you did not receive any benefit from the contribution.

If you gave $300 as a couple to a charity but that covered the cost of a five course formal dinner with wine and desserts, you can NOT deduct the $300. If you look closely at the ticket or literature you receive from the charity it will show you the deductible amount or state the amount of the value assigned to the dinner or play or other benefit which you received. In the latter case, you deduct the value of the service or benefit which you received from the total contribution to determine the amount of the tax deduction.

Remember, charitable deductions taken on YOUR return are no different than any other deduction which you list on the return. It is your return and it is your responsibility to have supporting documentation for the deduction. Perhaps next time we can discuss the guidelines for listing non-cash contributions and when it might be appropriate to use them.

In the meantime, if you have a specific question or want a brief, no cost consultation, you may call Debbie or go to the website at www.yourcpa.net.