Archive

Posts Tagged ‘Fair market value’

Give To Your Favorite Cause Before Year End – Some Useful Tips

December 4, 2013 Leave a comment
Gifts

Gifts (Photo credit: Guudmorning!)

As the end of 2013 approaches, donors are likely thinking about their
favorite charity or ministry and what they may be able to do in the way
of support.

I know I am.  I am always encouraged when I think
about the important mission of these organizations and how lives are
being changed as a result of what they are doing.  After all, that is
why we give.  We give because we are taking part in something bigger
than we are.  We give because we believe in the mission of these great
organizations.  We give because we believe in the power of giving to
transform lives, maybe even our own.

So, after dwelling on the good stuff it is then time to consider how to give.  Should I give cash?  Should I donate stock?  Should I do something else?

Having served in some nonprofits, I know we were always thankful for unrestricted
gifts in whatever form they came to us.  This might be your first
consideration and I would recommend making your gifts unrestricted so
that the organization can put it to use in the best way possible.

Next, if your cash position is good you will certainly want to share the wealth.   Here are a few reminders about cash gifts–

  • Make sure you are donating to a qualified organization if you want a tax deduction.
  • Make sure to get an official receipt for your gift, especially if it is over $250.
  • For tax purposes, cash donations generally have a deductible limit of 50% of your AGI.
  • You must make your gift before the end of the year or make sure it is postmarked December 31 if mailed.

If you want to make stock gifts at the end of 2012, this is a positive
time to do so.  The stock market has performed well over the past couple
of years and you may have stocks that you feel have appreciated
significantly.  Also, the fiscal cliff that has been the focus of the
post-election likely will see income tax rates and capital gains tax
rates rise after 2012.  With this in thought, making a stock gift seems
like the right and prudent thing to do.  Here are some reminders about
making stock gifts–

  • You can take a tax deduction for the fair market value of the stock at the time of the gift.
  • For tax purposes, stock gifts and other capital gain property gifts are limited to 30% of your AGI.
  • Make sure to give the stock directly to the charity (don’t sell it yourself and then give the cash).

Of course, make sure you consult your professional advisor as you plan your year-end giving.

No matter what your situation, you have the ability to make a difference
through your giving to nonprofits.  Keep that in mind as you move
forward into this holiday season.

Year End Tax Planning – Charitable Contributions

November 17, 2013 Leave a comment

 

Property, as well as money, can be donated to a charity. You can generally take a deduction for the fair market value of the property; however, for certain property, the deduction is limited to your cost basis. While you can also donate your services to charity, you may not deduct the value of these services. You may also be able to deduct charity-related travel expenses and some out-of-pocket expenses, however.

 

Keep in mind that a written record of charitable contribution is required in order to qualify for a deduction. A donor may not claim a deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.

 

Tip: Contributions of appreciated property (i.e. stock) provide an additional benefit because you avoid paying capital gains on any profit.

10 Key Facts About Mortgage Debt Forgiveness

September 16, 2013 Leave a comment

Here are 10 key facts from the IRS about mortgage debt forgiveness:

1. Cancelled debt normally results in taxable income. However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home.

2. To qualify, you must have used the debt to buy, build or substantially improve your principal residence. The residence must also secure the mortgage.

3. The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return.

4. You may be able to exclude from income the amount of mortgage debt reduced through mortgage restructuring. You may also be able to exclude mortgage debt cancelled in a foreclosure.

5. You may also qualify for the exclusion on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home. The exclusion is limited to the amount of the old mortgage principal just before the refinancing.

6. Proceeds of refinanced mortgage debt used for other purposes do not qualify for the exclusion. For example, debt used to pay off credit card debt does not qualify.

7. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Submit the completed form with your federal income tax return.

8. Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit cards or car loans. In some cases, other tax relief provisions may apply, such as debts discharged in certain bankruptcy proceedings. Form 982 provides more details about these provisions.

9. If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the following year. Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property.

10. Check your Form 1099-C for the cancelled debt amount shown in Box 2, and the value of your home shown in Box 7. Notify the lender immediately of any incorrect information so they can correct the form.

Is All Income Taxable?

September 9, 2013 Leave a comment
Dollar signs

Dollar signs (Photo credit: Match Financial)

Most types of income are taxable, but some are not. Income can
include money, property or services that you receive. Here are some
examples of income that are usually not taxable:

  • Child support payments;
  • Gifts, bequests and inheritances;
  • Welfare benefits;
  • Damage awards for physical injury or sickness;
  • Cash rebates from a dealer or manufacturer for an item you buy; and
  • Reimbursements for qualified adoption expenses.

Some income is not taxable except under certain conditions. Examples include:

Life insurance proceeds paid to you because of an insured
person’s death are usually not taxable. However, if you redeem a life
insurance policy for cash, any amount that is more than the cost of the
policy is taxable.

Income you get from a qualified scholarship is normally not
taxable. Amounts you use for certain costs, such as tuition and required
course books, are not taxable. However, amounts used for room and board
are taxable.

All income, such as wages and tips, is taxable unless the law
specifically excludes it. This includes non-cash income from bartering,
such as the exchange of property or services. Both parties must include
the fair market value of goods or services received as income on their
tax return.

If you received a refund, credit or offset of state or local income
taxes in 2012, you may be required to report this amount. If you did not
receive a 2012 Form 1099-G, check with the government agency that made
the payments to you. That agency may have made the form available only
in an electronic format. You will need to get instructions from the
agency to retrieve this document. Report any taxable refund you received
even if you did not receive Form 1099-G.

Thoughts on Giving to Your Favorite Nonprofit Before the End of 2012

November 27, 2012 Leave a comment
Gifts

Gifts (Photo credit: Guudmorning!)

As the end of 2012 approaches, donors are likely thinking about their favorite charity or ministry and what they may be able to do in the way of support.

I know I am.  I am always encouraged when I think about the important mission of these organizations and how lives are being changed as a result of what they are doing.  After all, that is why we give.  We give because we are taking part in something bigger than we are.  We give because we believe in the mission of these great organizations.  We give because we believe in the power of giving to transform lives, maybe even our own.

So, after dwelling on the good stuff it is then time to consider how to give.  Should I give cash?  Should I donate stock?  Should I do something else?

Having served in some nonprofits, I know we were always thankful for unrestricted gifts in whatever form they came to us.  This might be your first consideration and I would recommend making your gifts unrestricted so that the organization can put it to use in the best way possible.

Next, if your cash position is good you will certainly want to share the wealth.   Here are a few reminders about cash gifts–

  • Make sure you are donating to a qualified organization if you want a tax deduction.
  • Make sure to get an official receipt for your gift, especially if it is over $250.
  • For tax purposes, cash donations generally have a deductible limit of 50% of your AGI.
  • You must make your gift before the end of the year or make sure it is postmarked December 31 if mailed.

If you want to make stock gifts at the end of 2012, this is a positive time to do so.  The stock market has performed well over the past couple of years and you may have stocks that you feel have appreciated significantly.  Also, the fiscal cliff that has been the focus of the post-election likely will see income tax rates and capital gains tax rates rise after 2012.  With this in thought, making a stock gift seems like the right and prudent thing to do.  Here are some reminders about making stock gifts–

  • You can take a tax deduction for the fair market value of the stock at the time of the gift.
  • For tax purposes, stock gifts and other capital gain property gifts are limited to 30% of your AGI.
  • Make sure to give the stock directly to the charity (don’t sell it yourself and then give the cash).

Of course, make sure you consult your professional advisor as you plan your year-end giving.

No matter what your situation, you have the ability to make a difference through your giving to nonprofits.  Keep that in mind as you move forward into this holiday season.

Follow

Get every new post delivered to your Inbox.

Join 64 other followers

%d bloggers like this: