Charitable Travel - How Giving Back Can Reward you at Tax Time

Giving back by volunteering or serving on a non-profit board is a reward in itself. What makes it even better is that the government wants to give you a little break at tax time for your service as well.

Taxpayers are able to deduct reasonable expenses for travel, meals, and entertainment when travelling to perform charitable services. In order for expenses to be deductible, there cannot be a significant amount of personal recreation or vacation, the travel cannot be related to influencing legislation on behalf of a tax exempt organization, and the taxpayer's service must require them to be away from their permanent residence overnight.

For individuals who travel by car to perform charitable services, there is a standard mileage rate that the government allows. For the 2011 and 2012 tax years, taxpayers are able to deduct 14 cents per mile as well as tolls and parking costs incurred.

Keep written records of your travel and save all receipts related to the deductions you will be claiming. As always, use good judgment when considering the deductibility of expenses. The IRS does consider how necessary the travel was in order to perform the charitable services.

If you have any questions, or require additional information, please contact:

Susan K. Marley, CPA
302-656-6632
SMarley@CoverRossiter.com

This article can also be found on our website at http://bit.ly/VolunteerRewards.

FASB Project on Accounting for Leases

The rules on lease accounting have remained substantially unchanged since the 1970’s.  For the most part, lease payments are expensed as paid over the course of the lease.  Leases where the threshold for ownership transfer is met as defined by a narrow series of accounting parameters (capital leases) are accounted for as though the ownership had in fact changed hands with the net present value of lease payments being treated as a debt to be paid.

The Financial Accounting Standards Board (FASB) released an initial exposure draft on lease accounting rules in 2011, which, if implemented, would result in major changes to the manner in which leases are recorded by both lessors and lessees.  Based on the feedback received from industry professionals, the FASB decided to revise this exposure draft and FASB expects to issue a revised exposure draft by mid 2012.
Based on the current exposure draft, all organizations would require the recording of “right of use” assets (or liability) for all leases based upon the net present value of the contractual and probable lease payments discounted based on the incremental borrowing rate of the lessee.

If you have any questions or would like more information, please contact:

Eric Williams, CPA 302-656-6632 ewilliams@coverrossiter.com

E-Mail Schemes Using the IRS Name

In a world where technology has brought so many advances, it is unfortunate that it has also brought many financial risks.  All of us are aware that identity theft exists.  This theft can occur when someone uses your personal information to empty your bank accounts, apply for new credit cards or loans, or charge up existing credit cards.  There are many ways that criminals can obtain this information.  Unfortunately, many criminals are impersonating the IRS in order to gain trust and trick unsuspecting taxpayers.

According to the IRS website, the IRS does not initiate contact with taxpayers by e-mail to request personal or financial information.  They will never send communications requesting PIN numbers, passwords, or bank account and credit card information via e-mail.  Criminals are sending e-mails from false IRS e-mail addresses showing convincing IRS logos with many different scams.  For example, fraudulent e-mails in the past have told victims that they are eligible to receive a tax refund, they can take a paid survey about their dealings with the IRS, they have been suspected of fraud and need to complete an "investigation form", or that their recent payment to the IRS has been canceled.  Victims are asked to click on a link to complete the necessary information, which usually includes valuable personal information and detailed bank account information as well.

The IRS website, IRS.gov, has specific instructions for those that receive these e-mails.  If you ever receive an e-mail from someone claiming to be the IRS, do not reply to the e-mail.  Be sure never to open any attachments or click on any links within the e-mail.  Forward the e-mail, exactly as it was received, to phishing@irs.gov.  Once forwarded to the IRS, delete the e-mail permanently from your computer.  As always, if you have any question regarding the validity of an e-mail from the IRS, contact your accountant or tax advisor for guidance.  For more information on identity theft and protecting yourself, visit the IRS website, where they added a new section devoted to tips, guidance and even YouTube videos about identity theft.

If you have any questions, or require any additional information, please contact:
Susan K. Marley, CPA (302) 656-6632 SMarley@CoverRossiter.com