DONATING A CAR?

Donating a car to a registered non-profit is a generous thing to do, but the tax benefits may not be what you are hoping for.

In the past, taxpayers could donate an old car and claim the fair market value of the car as a charitable deduction, but unfortunately, too many people inflated the fair market value and the IRS got wise to the abuse and changed the rules.

Now, taxpayers can only deduct the value that the non-profit receives from the car. Here's an example of what I mean:

Bob gives his car to a non-profit after-school program. They decide to use the car as a raffle prize and sell tickets for $25 a piece. They sell 25 tickets for a total of $625. Bob is allowed to deduct $625 on his schedule A under charitable contributions. Is Bob happy about this? No, because Bob's car was listed in the Kelley Blue Book as being valued at $4,000. Bob just got jipped, for being a good guy! Not cool!

There are exceptions though. Let's say that Bob donates his car to a non-profit that assists victims of domestic violence. The organization decides to give the car to a woman staying in their shelter who has left an abusive spouse and needs a car to support her children. If this is the case, the non-profit can write a letter explaining how the car was used and why it was given away or sold below fair market value.

Another, and perhaps, better option, is to sell the car yourself, and then donate the proceeds to your favorite charity, that way you can deduct the full amount as a cash donation. As the former Program Director at a tiny little non-profit, I can tell you cash donations are always greatly appreciated.

As with anything, make sure you keep good records, the organization is required to send you a letter acknowledging your gift and providing you with their IRS identification number.

For questions on how donations can help reduce your taxable income, just drop me an email!

Jen Solis
jen@commonsensetaxprep.com
COMMON SENSE TAX PREP

The IRS causes 7 MILLION kids to disappear?

"One spring evening at midnight in 1987: seven million American children suddenly disappeared. The worst kidnapping wave in history? Hardly. It was the night of April 15, and the Internal Revenue Service had just changed a rule. Instead of merely listing the name of each dependent child, tax filers were now required to provide a Social Security Number. Suddenly, seven million children-children who had existed only as phantom exemptions on the previous year's 1040 forms-vanished, representing about one in ten of all dependent children in the United States." - Steven D. Levitt & Stephen J. Dubner, Freakonomics

Common Sense Tax Preparation believes in doing taxes correctly, minimizing liability, maximizing refunds... the right way, no short cuts or risky, audit causing cheats. Please check out our website and consider us for your tax preparation needs!

Best wishes to you all this holiday season!
Jen Solis
Common Sense Tax Preparation

TIS THE SEASON (for shady tax preparers to pop up everywhere)

Looking on the bright side, at least you could get a super cheap hair-cut while getting your taxes done, then you can take your refund next door to exchange it for some lottery tickets? PLEASE, beware of shady tax preparation services! I've seen first hand the chaos they can create.

Anyone can prepare a tax return and anyone can charge you money to do it. This is a major problem with our tax system. People get ripped off, confused and taken advantage of. Plus, a lot of these places pop up in really sketchy parts of town that you would not want to be caught dead in, let a lone be caught with all of your vital, financial and personal data!

I live in California, where the state requires tax preparers to complete a 60 hour course and pass a test to prove they know what they are doing. That's a nice extra step, but I was stunned with a number of things when I went through the process last fall....

Many of the "schools" sanctioned by the state to offer the educational programs were unsavory to say the least. Basically, anyone can pay the fee for the course, get the certificate, then pay the fee to the state and bam! they are a tax preparer! Considering how complex and how important tax returns are, this was troubling to me on many levels.

I am a student of accounting. I plan to be a CPA. I have over 8 years of experience actually preparing returns. I have been trained by the IRS, I have managed IRS sponsored programs (VITA and LITC). I am by nature an honest, trustworthy person. I like to do things well. I like to do things right.

More then anything, I want you to find a tax preparer that you can trust completely. If that's me, that's wonderful, and I am going to work really hard to earn your trust. I would like to be your tax preparer for years to come, and I want you to want to tell your friends about my excellent service and reasonable prices.

Thanks for reading.

Jen Solis
Common Sense Tax Preparation