If you’re like many Americans, letters from your favorite charities may be appearing in your mailbox acknowledging your 2020 donations. But what happens if you haven’t received such a letter — can you still claim a deduction for the gift on your 2020 income tax return? It depends.
Continue Reading What to Know About Charitable Deduction Substantiation
Many people are more concerned about their 2020 tax bills right now than they are about their 2021 tax situation. That’s understandable because your 2020 individual tax return is due to be filed in less than three months (unless you file an extension).
However, it’s a good idea to acquaint yourself with tax amounts that may have changed for 2021. Below are some Q&As about tax amounts for this year.
Be aware that not all tax figures are adjusted annually for inflation and even if they are, they may be unchanged or change only slightly due to low inflation. In addition, some amounts only change with new legislation.
Continue Reading Have Questions About Your 2021 Tax Situation?
Jen: This is the PKF Texas – Entrepreneur’s Playbook®. I’m Jen Lemanski, and I’m here today with Emily Smikal, a Director in our tax department and one of the faces of the PKF Texas not-for-profit team. Emily, welcome to the Playbook.
Emily: Thanks, Jen. Thanks for having me.
Jen: So, I’ve heard you talk before about this thing called “unrelated business income tax.” How does that impact not-for-profits, and what should they know?
Emily: First, let’s call it UBI just to keep it more simple. UBIT, unrelated business income tax, is an income tax imposed on certain not-for-profit organizations that conduct certain activity that is not related to their tax-exempt purpose.
Jen: So, what would qualify for that?
Continue Reading How Unrelated Business Income Tax Impacts Not-for-Profits
Although electric vehicles (or EVs) are a small percentage of the cars on the road today, they’re increasing in popularity all the time. And if you buy one, you may be eligible for a federal tax break.
The tax code provides a credit to purchasers of qualifying plug-in electric drive motor vehicles including passenger vehicles and light trucks. The credit is equal to $2,500 plus an additional amount, based on battery capacity, that can’t exceed $5,000. Therefore, the maximum credit allowed for a qualifying EV is $7,500.
Continue Reading What to Know About Tax Credit for Electric Vehicles
Attending college and pursuing higher education is one of the biggest investments that parents and students ever make. If you or your child (or grandchild) attends (or plans to attend) an institution of higher learning, you may be eligible for tax breaks to help foot the bill.
The Consolidated Appropriations Act, which was enacted recently, made some changes to the tax breaks.
Here’s a rundown of what has changed.
Continue Reading Understanding Revised Tax Benefits for Higher Education
The new COVID-19 relief law that was signed on December 27, 2020, contains a multitude of provisions that may affect you.
Here are some of the highlights of the Consolidated Appropriations Act, which also contains two other laws: the COVID-related Tax Relief Act (COVIDTRA) and the Taxpayer Certainty and Disaster Tax Relief Act (TCDTR).
Continue Reading What You Need to Know About the COVID-19 Relief Law
The fourth 2020 estimated tax payment deadline for individuals is Friday, January 15, 2021. If you’re self-employed and don’t have withholding from paychecks, you probably have to make estimated tax payments. These payments must be sent to the IRS on a quarterly basis.
Even if you do have some withholding from paychecks or payments you receive, you may still have to make estimated payments if you receive other types of income such as Social Security, prizes, rent, interest, and dividends.
You may be able to deduct some of your medical expenses, including prescription drugs, on your federal tax return. However, the rules make it hard for many people to qualify.
But with proper planning, you may be able to time discretionary medical expenses to your advantage for tax purposes.
Continue Reading Qualifying for Medical Expenses Tax Deduction
Holiday-inspired generosity and the desire to reduce tax liability makes the end of the year a busy time for charitable giving. According to Network for Good and other sources, approximately 30% of charitable gifts are made in December alone. For not-for-profits, an important part of processing these donations is sending thank-you letters that acknowledge donor gifts.
To ensure your letters contain everything they should, here’s a refresher course.
Continue Reading The Importance of Acknowledging Donor Gifts
Contributing to a tax-advantaged retirement plan can help you reduce taxes and save for retirement. If your employer offers a 401(k) or Roth 401(k) plan, contributing to it is a smart way to build a substantial sum of money.
If you’re not already contributing the maximum allowed, consider increasing your contribution rate. Because of tax-deferred compounding (tax-free in the case of Roth accounts), boosting contributions can have a major impact on the size of your nest egg at retirement.
With a 401(k), an employee makes an election to have a certain amount of pay deferred and contributed by an employer on his or her behalf to the plan. The contribution limit for 2020 is $19,500. Employees age 50 or older by year end are also permitted to make additional “catch-up” contributions of $6,500, for a total limit of $26,000 in 2020.
The IRS recently announced that the 401(k) contribution limits for 2021 will remain the same as for 2020.
Continue Reading Save for Retirement by Maximizing Your 401(k) Plan