Want To Help People Affected By Harvey, Irma And Other Disasters? Make sure to give to an IRS-recognized charity if you want a tax deduction. Watch out for bogus charities and solicitors. IRS is warning taxpayers to be alert for scammers who claim to solicit funds for victims of natural disasters. If you are age 70½ and older, consider making the donation from your IRA. You can transfer up to $100,000 annually from your traditional IRA directly to charity. The charitable transfers count as all or part of your required minimum distribution, but unlike other IRA payouts, these direct gifts are not added to your taxable income. Parents Cannot Deduct Amounts Spent On Child’s Beauty Pageants The daughter who began competing at age 9, won between $1,000 and $2,000 in prize money each year that was deposited into her college savings account. The parents reported the income on their tax returns and also large deductions for the cost of travel, costumes, and other expenses. Because the prize winnings were compensation for the child’s services in the pageant, they are included in the child’s income, not the parents. Only the child can deduct the costs, even though the expenditures were made by the parents. Lopez TC Memo 2017-17. If you are in this situation, you should contact us to properly plan your financial affairs including the very novel way Dorothy Hamill’s parents did it. Truncated SS#s Effective January 1, 2019, employers will be able to truncate Social Security numbers on W-2s that are sent to employees. The IRS has announced, in proposed regulations, that only the last four digits will need to be shown on W-2s given to employees in the hope of combating identity theft and refund fraud. The complete number will still have to be listed on the form that is sent to the Social Security Administration. The Reason Why Tax Reduction will mostly benefit the wealthy is because they pay most of the personal taxes. According to 2015 statistics, the bottom 50% of filers paid 2.83% of federal taxes. The top 1% paid 39.04% (AGI of $480,930 or more) of all taxes. The top 5% expanded the take to 59.98% (AGI of $195,778 or more). The top 10% (AGI of $138,131) paid 70.59% of the burden. So, another way of looking at this, and not what a politician would say, is that the top 1% paid 13 times as much as the bottom half of taxpayers. The top 5% paid 20 times as much as the bottom half. So, if the 1% paid 27 times as much, doesn’t logic dictate that they probably would get much more of the benefit? As always, if you have any questions about these or any other matters, do not hesitate to call us. Remember, We’re Here For You!