Tax Documentation Reminders
Charitable Contributions: The IRS is no longer allowing an additional charitable deduction for taxpayers taking the standard deduction. If you are itemizing for federal or state, you must have proof of all charitable contributions (both cash & non-cash) such as a receipt/letter from the charity or a cancelled check. Contributions of $250 and over require a letter from the charity. For contributions made through payroll, please submit your final paystub showing the total contribution for the year. *Please note, money giving through GoFundMe is NOT a charitable contribution. Only donations made to 501(c)3 organizations are tax deductible. For non-cash donations, I recommend keeping a detailed listing of items & pictures of larger items.
Education Credits: Qualifying expense for the “American Opportunity Tax Credit” not only includes tuition cost but also course materials. To take the AOTC, F. 1098-T showing tuition paid as well as any scholarships must be submitted. This credited can be taken only four times per individual and the person taking the credit must be listed on the return. For example, a parent may claim the education credit for paying of a child’s schooling as long as that child is listed as a dependent on the tax return. After four years, other education credits, such as Life Time Learning, may be available. Please note, these credits are limited based on income.
HSA: Any taxpayer that has a Health Savings Account (“HSA”) will receive a F. 1099-SA reporting any distributions taken. Over the years, I have noticed most taxpayers have to download this form and it is not mailed. If you don’t provide a F. 1099-SA and have used your HSA during the tax year, the IRS may adjust your return and tax you on the distributions. Distributions are only tax free if used for qualified medical expenses which reported as such on the 1099-SA.
Estimated Tax Payments: If you have made estimated tax payments to the IRS or the state, please submit the amount and date paid for each payment. For supporting documentation, if you paid online, please include the payment confirmation or receipt and if by check, a copy of the cleared check from your bank statement. Payments dates are required for the tax return.
Marketplace Health Insurance (Government Healthcare excluding Medicare & Medicaid): Any taxpayer who has government health insurance through the Marketplace (AKA “Obama Care”), not Medicare or Medicaid, will receive a F. 1095-A to report premiums and distributions during the tax year. This form is required for your tax return.
Virtual Currency (“VC”): The IRS considers virtual currency (AKA Cryptocurrency – e.g., Bitcoin) as property for tax purposes and reportable on a tax return. As such, any transactions or earnings/rewards create a taxable event. If you sold VC which you have held for over a year this transaction will currently receive long-term capital gains treatment. Anything held less than a year, is seen as short-term and taxed at your personal tax bracket. You may receive a F. 1099 with this information; however, you may have to download your transaction summary yourself. You are required to report on your tax return if you own VC whether or not you had any activity during the tax year.
Foreign bank accounts or financial interest: Any US person or entity having a financial interest in, signature power, or other authority over foreign bank accounts, securities, or other financial accounts having an aggregate value exceeding $10,000 at any time during the calendar year is required to report this information on their tax return and may be subject to additional filings. Filing requirements may also apply to taxpayers that have direct or indirect control over a foreign or domestic entity with foreign financial interest/authority even if the taxpayer doesn’t have financial accounts.