Donation Acknowledgement Letters

To support a cash donation of $250 or more the IRS requires you to have an acknowledgement (ack) letter from the charity which indicates the total amount of the contribution less the fair market value of anything you received back from the charity like a dinner or gift. All charities are required to give you such a letter so now is the time to request one for a 2015 donation if you don't have it. If you get audited 3 years from now and don't have the ack letter, the deduction will be denied. The IRS will still deny the deduction even if you get an ack letter at the time of the audit since the ack letter must be received by the date the original tax return was filed.

Filing Requirements for Children for the 2015 Tax Return

A return is required if the child has over $6,300 in earned income such as wages or unearned income like interest , dividends, and capital gains over $1,050.

Receipts

Income and deductions on tax returns should be supported by receipts that you keep in your files for at least 3 years. To do your tax return, I generally only need those items that are sent in to the IRS like 1099's and W-2's. I keep a computer record of those so that I can more easily help you with any future IRS inquiry. For most deductions, I just want you to give me amounts and totals instead of the receipts. Keep a file of receipts and tax documents by year including a copy of the return. After 3 years, throw away the receipts and supporting documents, but keep the copy of the tax return.

Calling the IRS

One of the more frustrating things in life is needing help from the IRS to solve a problem. You need to set aside about an hour to wait on the phone before you can talk to a person. Get a good book to read while you wait. You also have to prove who you are by giving them your social security number, adjusted gross income for the tax return in question, and  your date of birth. Don't call on a Monday or a Friday. Mid week is probably best. I can't help you unless I get a power of attorney from you so they will talk to me.

Due Date for the 2015 Individual Income Tax Return

The due date for your 2015 individual tax return is Monday April 18, 2016, three days later than normal due to a Washington DC holiday on the 15th. An extension can let you wait another six months until October 17, 2016 to file your return. You still have to pay all taxes due by April 18 or pay interest of 3% on an annual basis and .5%  late payment penalty per month on any unpaid tax. I urge you to file your 2015 return as soon as you can and avoid penalties, interest and uncertainty. I'm here to help you meet that goal.

2016 Standard Mileage Rates

The IRS has reduced the mileage rates in 2016. The rate for business mileage is now 54 cents per mile which is down from 57.5 cents per mile for 2015. Medical and moving mileage is now 19 cents per mile and charitable mileage is 14 cents per mile. The business mileage rate can be used for checking on rental properties too. Keep track of your trips to Goodwill to drop off donations of clothing and household goods and church volunteer work as the mileage is deductible at 14 cents per mile.

2016 Obamacare Penalty

If you don't have health insurance coverage in 2016, the penalty just increased to the greater of 2.5% of your household income or $695 per adult plus $347.50 per child limited to a family maximum of $2,085. The numbers in 2015 are 2% of household income and $325 per adult and $162.50 per child with a family maximum of $975. The penalty is calculated on your tax return on line 61.