Category: AHP Blog

As year end approaches, you may be thinking about making some charitable donations. Here’s a rundown of the potential tax breaks for your generosity.

Itemized Deductions
You can claim write-offs for contributions of cash and other items donated to charitable organizations, such as United Way and Goodwill. What you might not realize is that not all contributions to charities qualify for tax breaks.

First, you receive tax savings from charitable donations only if you itemize deductions on your personal tax return. For 2017, the standard deduction amounts are:

The IRS is warning about possible fake charity scams that are emerging due to recent hurricanes. Taxpayers who want to help should seek out recognized charitable groups to make donations.

“While there has been an enormous wave of support across the country for the victims of Hurricane Harvey, people should be aware of criminals who look to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers,” the IRS stated. Such fraudulent schemes may involve in-person solicitations or contact by telephone, social media and e-mail.

Criminals often send “phishing” e-mail messages that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes. These sites frequently try to imitate the websites of — or use names similar to — genuine charities. They sometimes claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.

Although nowhere in the United States is safe from Mother Nature, there is a silver tax lining: If your personal-use property is struck by a natural disaster, damaged by another calamity or stolen, you may be able to obtain some relief by claiming a casualty or theft loss as an itemized deduction on your individual tax return. As with most tax breaks, however, there are important rules and limits you need to be aware of.

The Basics
To qualify for a casualty loss deduction, the damage or destruction must result from a “sudden, unexpected or unusual” event. Typically, this includes damage or destruction caused by natural disasters, such as hurricanes, tornadoes, fires, earthquakes or volcanic eruptions. But casualty losses may also result from such events as automobile collisions or water pipes bursting during a severe cold snap.

If you recently filed your 2016 income tax return (rather than filing for an extension) you may now be wondering whether it’s likely that your business could be audited by the IRS based on your filing. Here’s what every business owner should know about the process.

Catching the IRS’s Eye
Many business audits occur randomly, but a variety of tax-return-related items are likely to raise red flags with the IRS and may lead to an audit. Here are a few examples:

Feeling the urge to purge? April 18, 2017, was the deadline for individuals and C corporations to file their federal income tax returns for 2016 (or to file for an extension). Before you clear your filing cabinets of old financial records, however, it’s important to make sure you won’t be caught empty-handed if an IRS auditor contacts you.

With the leading edge of the Baby Boomer generation already past the age of 70, the next two decades will see a 90% surge in the number of people in this segment of the population.

As the ranks of Baby Boomers residing with their children or remaining independent continue to swell, housing demands are changing. There is a growing need for existing home renovations and new housing that accommodate the needs of this aging population. Where expectant parents baby-proof their homes, many residences now may need to be “senior proofed.” This poses challenges and opportunities for the construction industry.

It’s the goal of many Americans to pass wealth to the next generation. To maximize what goes to your loved ones vs. Uncle Sam, you need to carefully plan your gifts.

Giving away assets during your life will help reduce the size of your taxable estate, which is beneficial if you have a large estate that could be subject to estate taxes. For 2016, the lifetime gift and estate tax exemption is $5.45 million (twice that for married couples with proper estate planning strategies in place).