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Client Tax News & Information
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Annually, we urge clients to take a few moments around September, to review their pay stubs for withholding accuracy. We consider this a mock-up and we calculate your year-to-date income at that point in time to determine an estimated balance due or refund. While there is a fee for this service, the service proves quite valuable to the client in preparing for a balance due and/or rendering an estimated payment or even making a withholding adjustment, to avoid P&I imposed by the IRS later. Please contact the office and we can assist you.
Frequently Requested Tax Information
Common Tax Issues & Information
Mileage Rates
The 2022 Auto Standard Business Mileage rate is 58.5 cents for January through June and for July through December, it is 62.5 cents. You must provide a mileage log or calendar during an IRS examination. Contact the staff for a free log or reproduce your own via calendar worksheets online. No mileage expense will be allowed in an audit without documentation as the IRS offers no exceptions!
Non-Custodial Parents and Form 8332
Non-custodial parents must make nice if they want the child dependency exemption. The IRS has "had it" with trying to muster thru court documents regarding who should be entitled to the exemption. This includes "shared-parenting" agreements. Someone has the child in their home at least one more day than the other because there are 365 days a year. Form 8332 must be signed by the parent releasing the exemption and provided to the non-custodial parent for inclusion with his/her income tax return. Please contact staff for this Form or obtain it online at www.irs.gov and bring it with you to the income tax return appointment.
Tax professionals have different views on the sufficiency of attaching the divorce decree to your income tax return in place of Form 8332. The IRS states that no longer will the divorce decree be sufficient to attach. Some tax preparers are allowing this but there are 3 rules to comply with. Most of the time, 2 of the 3 rules can be met but the third, "the custodial parent agrees not to claim the child" lies the problem. No one can guarantee that the custodial parent will not assert his/her rights to claim the child. Because of this, Goodman will be using the Form 8332 attachment to protect our office as well as protect our client.
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Value of Donation
If you donate property rather than cash, you must assess the property's fair market value on the day of contribution to determine the correct deduction. Donated clothes and household items such as furniture and appliances must be in good used condition to take the deduction. If the amount of an item donated exceeds $5,000, you must obtain a written appraisal and attach it to the tax return. We will calculate the market value of all client donations as long as “you have the donation receipt completely itemized by count, brand, and description of your items”. Goodman will not complete the itemization of any donation receipts, only calculate the market value.
Deduction Limits
The IRS limits the deductible amount to 50% of adjusted gross income. If in a single tax year, you donate $60,000 worth of property to a church and have an adjusted gross income of $100,000, the total deduction for charitable contributions is limited to $50,000. The remaining $10,000 can be carried forward and deducted on future tax returns within five years.
Why do we preach documentation, documentation, documentation? Check out this story from Accounting Today.
