While donating your time to charity is not a tax deduction, the cost of materials and out of pocket expenses are a deductible charitable donation expense. My daughter makes earrings and sells for a couple of dollars each. She is donating all the proceeds to charity. if she donated the earrings themselves, she would be able to deduct her costs to make the earrings as a charitable deduction. You can email me and we can discuss if you have a similar situation.bstonercpa@sbcglobal.net www.briantstonercpa.com
Brian’s Tax Musings
Sorry I didn’t blog on Memorial Day – had to clean out my father-in-law’s house (he is moving and sold his house with a 30 day escrow). I wish we had a picnic instead. Back to the blog:Is it better to take actual auto expenses or the IRS Mileage rate for a business deduction?It will depend on:*How accurate is your mileage log? (You have to start with something)*How many miles did you drive? (Sometimes more miles works in favor of the mileage rate)*Are you leasing or buying your car? (Leasing can sometimes give you bigger deductions)*How old is your car? (The mileage rate can yield bigger deductions on an older car)Perhaps you should ask your tax professional (or me) and he can look at your individual situation and see which works best.
Brian’s Tax Musings
If you lose your tax documentation for a year the IRS has decided to audit (or they were destroyed, the dog ate them, whatever) neither the government nor the tax court will show you any mercy. You are allowed to reconstruct the data from documentation available and the auditor will probably give you some time, but if it is not sufficient be prepared to lose some deductions and pay some tax. I once had a specialty furniture company audited and in a move the accounts receivable was accidently shreaded (the controller was an idiot.) We were able to reconstruct the receivables and deferred customer deposits (the area the auditor wanted to declare $200,000 in income) and save the client about $50,000 in taxes, but we billed the client an additional $9000 that he didn’t have to pay if the records were on hand. Make sure you scan and backup all your tax and audit data to make sure it doesn’t happen to you. Remember the kid whose dog ate his homework usually gets an F.