Answers to Tax Return Questions

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Prepared by Josh Colsson, CPA– Tax Manager

We’ve compiled a list of the most frequently asked questions concerning tax returns.
Q. What do I need to have for documentation for charitable contributions?
A. The donor must maintain a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution. A contribution in excess of $250 requires a letter from the organization.
Q. What about non-Cash?
A. The value of property donations is harder to prove, and the IRS is more likely to investigate non-cash gifts than cash ones. Merely submitting Form 8283 — which is used in non-cash donations of more than $500 — is enough to raise some IRS eyebrows. Be sure to get an itemized receipt whether your gift is a piece of land for a hospital to build on or a bunch of clothes going to Goodwill. Larger items (in this case, the land) will need a detailed valuation as support. You can only deduct the fair-market value of your donation — not the price you paid for it. Because of the potential for abuse on claiming non-cash gifts, make sure you have all the paperwork.
Q. How does a home office benefit me?
If you use part of your home exclusively for business, you may be able to deduct expenses for the business use of your home. The home office deduction is available for homeowners and renters and applies to all types of homes.

Simplified Option

You now have a simplified option for computing the home office deduction. The standard method has some calculation, allocation, and substantiation requirements that are complex and burdensome for small business owners.
This new simplified option can significantly reduce the burden of recordkeeping by allowing a qualified taxpayer to multiply a prescribed rate by the allowable square footage of the office in lieu of determining actual expenses.

Regular Method

Taxpayers using the regular method (required for tax years 2012 and prior), instead of the optional method, must determine the actual expenses of their home office. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation.
Generally, when using the regular method, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
Q. How long will it take to get my refund?
A. The IRS states that 9 out of 10 e-filed tax returns with direct deposit will be processed within 21 days of IRS e-file acceptance. Mailed paper returns – Refund processing time is 6 to 8 weeks from the date the IRS receives your tax return.

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