Nonprofit Quick Tip: Policies

The Nonprofit Advisor will feature quick tips focusing on policies that all nonprofit organizations should consider establishing, and the key components those policies should include. In this issue we focus on the reasons for establishing the policies themselves.

Formal policies are vital to any nonprofit organization. Policies not only provide guidance, but they protect the organization from legal challenges, provide compliance with regulations and funding agencies, and set the tone for ethical and transparent conduct by employees. Policies also allow organizations to operate consistently when similar situations arise or when there is turnover in management and governance.

Policies should be well thought out and thoroughly documented by the organization to be the most effective. Policies are not static and should be considered periodically for updates in regulations, laws and the activities of the organization.

Check Out Our eBook on Creating Policies for Your Nonprofit

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Each month, the Office of Inspector General (OIG) publishes various Work Plans (topics) that target concerns raised by Congress, the Centers for Medicare and Medicaid Services (CMS) and other organizations, on which the OIG will focus for the current fiscal year or beyond.

Continue reading, OIG Work Plan Topics, to learn about the two recent targets for 2018.

WPS Government Health Administrators (WPS GHA) is authorized by the Centers for Medicare and Medicaid Services (CMS) to conduct the Targeted Probe and Educate (TPE) review process. This process is required of the providers identified by Medical Review.

Read more about the TPE process by visiting Yeo & Yeo Medical Billing & Consulting’s blog.

Yeo & Yeo’s Education Services Group is reminding all school districts about the deadline for Uniform Guidance policies.

Beginning July 1, 2018, all aspects of the Uniform Guidance procurement standards must be satisfied by your district’s policies and procedures. There will not be another deferment. All policies and procedures related to federal programs should be updated and in place no later than July 1 to ensure compliance with Uniform Guidance.

Following are useful links to examples that the MDE, MSB0, and several Michigan schools have compiled to assist with the process.

Please contact your Yeo & Yeo representative if you have questions.

If the Michigan Department of Treasury determined that one or more of your pension or OPEB plans was underfunded after you completed Form 5572 – Local Retirement Government System Annual Report, the Treasury will send a letter regarding their preliminary review of the underfunded status. An application to apply for a waiver will be attached to the letter.

For each underfunded plan, a separate waiver application must be submitted. Local units have 45 days from the date of the letter to submit their application; otherwise, plans will be automatically deemed underfunded.

The application must describe steps that the local unit has taken to address the underfunding. This is not a prospective plan, but rather actions that local units have already done (closed plans, reduced benefits, obtained additional funding, etc.). The waiver application must be approved by the local unit’s governing body, and evidence of approval must be submitted with the application.

Once received, the Treasury will determine whether a waiver will be granted.

If a waiver is granted, the Treasury will provide notification.
If a waiver is not granted, corrective action (approved by the governing body) will be requested by the Municipal Stability Board within 180 days (with a possible 45 day extension). The Board will then approve or reject the corrective action plan within 45 days.

Please contact your Yeo & Yeo representative if you have questions.

When it comes to income tax returns, April 15 (actually April 17 this year, because of a weekend and a Washington, D.C., holiday) isn’t the only deadline taxpayers need to think about. The federal income tax filing deadline for calendar-year partnerships, S corporations and limited liability companies (LLCs) treated as partnerships or S corporations for tax purposes is March 15. While this has been the S corporation deadline for a long time, it’s only the second year the partnership deadline has been in March rather than in April.

Why the deadline change?

One of the primary reasons for moving up the partnership filing deadline was to make it easier for owners to file their personal returns by the April filing deadline. After all, partnership (and S corporation) income passes through to the owners. The earlier date allows owners to use the information contained in the pass-through entity forms to file their personal returns.

What about fiscal-year entities?

For partnerships with fiscal year ends, tax returns are now due the 15th day of the third month after the close of the tax year. The same deadline applies to fiscal-year S corporations. Under prior law, returns for fiscal-year partnerships were due the 15th day of the fourth month after the close of the fiscal tax year.

What about extensions?

If you haven’t filed your calendar-year partnership or S corporation return yet, you may be thinking about an extension. Under the current law, the maximum extension for calendar-year partnerships is six months (until September 17, 2018, for 2017 returns). This is up from five months under prior law. So the extension deadline is the same — only the length of the extension has changed. The extension deadline for calendar-year S corporations also is September 17, 2018, for 2017 returns.

Whether you’ll be filing a partnership or an S corporation return, you must file for the extension by March 15 if it’s a calendar-year entity.

When does an extension make sense?

Filing for an extension can be tax-smart if you’re missing critical documents or you face unexpected life events that prevent you from devoting sufficient time to your return right now.

But keep in mind that, to avoid potential interest and penalties, you still must (with a few exceptions) pay any tax due by the unextended deadline. There may not be any tax liability from the partnership or S corporation return. If, however, filing for an extension for the entity return causes you to also have to file an extension for your personal return, you need to keep this in mind related to the individual tax return April 17 deadline.

Are you curious about 2018’s tax return? See our Pass-through Deduction flow chart that describes the tax treatment for deductions under the Tax Cuts and Jobs Act (TCJA).

Have more questions about the filing deadlines that apply to you or avoiding interest and penalties? Contact us.

Whether you’re claiming charitable deductions on your 2017 return or planning your donations for 2018, be sure you know how much you’re allowed to deduct. Your deduction depends on more than just the actual amount you donate.

Type of gift

One of the biggest factors affecting your deduction is what you give:

Cash. You may deduct 100% gifts made by check, credit card or payroll deduction.

Ordinary-income property. For stocks and bonds held one year or less, inventory, and property subject to depreciation recapture, you generally may deduct only the lesser of fair market value or your tax basis.

Long-term capital gains property. You may deduct the current fair market value of appreciated stocks and bonds held for more than one year.

Tangible personal property. Your deduction depends on the situation:

If the property isn’t related to the charity’s tax-exempt function (such as a painting donated for a charity auction), your deduction is limited to your basis.
If the property is related to the charity’s tax-exempt function (such as a painting donated to a museum for its collection), you can deduct the fair market value.

Vehicle. Unless the vehicle is being used by the charity, you generally may deduct only the amount the charity receives when it sells the vehicle.

Use of property. Examples include use of a vacation home and a loan of artwork. Generally, you receive no deduction because it isn’t considered a completed gift.

Services. You may deduct only your out-of-pocket expenses, not the fair market value of your services. You can deduct 14 cents per charitable mile driven.

Other factors

First, you’ll benefit from the charitable deduction only if you itemize deductions rather than claim the standard deduction. Also, your annual charitable donation deductions may be reduced if they exceed certain income-based limits.

In addition, your deduction generally must be reduced by the value of any benefit received from the charity. Finally, various substantiation requirements apply, and the charity must be eligible to receive tax-deductible contributions.

2018 planning

While December’s Tax Cuts and Jobs Act (TCJA) preserves the charitable deduction, it temporarily makes itemizing less attractive for many taxpayers, reducing the tax benefits of charitable giving for them.

Itemizing saves tax only if itemized deductions exceed the standard deduction. For 2018 through 2025, the TCJA nearly doubles the standard deduction — plus, it limits or eliminates some common itemized deductions. As a result, you may no longer have enough itemized deductions to exceed the standard deduction, in which case your charitable donations won’t save you tax.

You might be able to preserve your charitable deduction by “bunching” donations into alternating years, so that you’ll exceed the standard deduction and can claim a charitable deduction (and other itemized deductions) every other year.

Let us know if you have questions about how much you can deduct on your 2017 return or what your charitable giving strategy should be going forward, in light of the TCJA.

Join us for a complimentary seminar that includes breakfast and three informative sessions that will help you take control of the financial side of your business.

Wednesday, March 28
AgroLiquid Conference Center | St. Johns, Michigan
8:00-11:00 a.m.

“How Will Tax Reform Affect Agribusiness,” presented by Eric Sowatsky, CPA, of Yeo & Yeo CPAs & Business Consultants.
Plan ahead for tax changes for you personally and your business.
“‘Don’t Get Robbed,” presented by David Boeve, Assistant VP of Agricultural Banking at PNC Bank. How to stop money from escaping the farm cash flow.
“The Powerful Habits of the Most Effective Marketers,” presented by Chad Goodwill of Stewart-Peterson.
A holistic view of risk management can lead to better financial outcomes.

Reserve your seat at the seminar in St. Johns.

We look forward to seeing you at the seminar. If you have questions, please contact Yeo & Yeo’s Agribusiness Services Group.

The “sandwich generation” accounts for a large segment of the population. These are people who find themselves caring for both their children and their parents at the same time. In some cases, this includes providing parents with financial support. As a result, estate planning — which traditionally focuses on providing for one’s children — has expanded in many cases to include aging parents as well.

Including your parents as beneficiaries of your estate plan raises a number of complex issues. Here are five tips to consider:

1. Plan for long-term care (LTC). The annual cost of LTC can reach well into six figures. These expenses aren’t covered by traditional health insurance policies or Medicare. To prevent LTC expenses from devouring your parents’ resources, work with them to develop a plan for funding their healthcare needs through LTC insurance or other investments.

2. Make gifts. One of the simplest ways to help your parents financially is to make cash gifts to them. If gift and estate taxes are a concern, you can take advantage of the annual gift tax exclusion, which allows you to give each parent up to $15,000 per year without triggering taxes.

3. Pay medical expenses. You can pay an unlimited amount of medical expenses on your parents’ behalf, without tax consequences, so long as you make the payments directly to medical providers.

4. Set up trusts. There are many trust-based strategies you can use to financially assist your parents. For example, in the event you predecease your parents, your estate plan might establish a trust for their benefit, with any remaining assets passing to your children when your parents die.

5. Buy your parents’ home. If your parents have built up significant equity in their home, consider buying it and leasing it back to them. This arrangement allows your parents to tap their home equity without moving out while providing you with valuable tax deductions for mortgage interest, depreciation, maintenance and other expenses. To avoid negative tax consequences, be sure to pay a fair price for the home (supported by a qualified appraisal) and charge your parents fair-market rent.

As you review these and other options for providing financial assistance to your aging parents, try not to overdo it. If you give your parents too much, these assets could end up back in your estate and potentially exposed to gift or estate taxes. Also, keep in mind that some gifts could disqualify your parents from certain federal or state government benefits. Contact us for additional details.

The CAN Council Great Lakes Bay Region honored Yeo & Yeo Principal Michael T. Tribble as their 2018 Child Advocate of the Year. The award was presented on February 22 at Horizons Conference Center during the CAN Council’s 25th Annual Mardi Gras Auction.

Since 2000, the CAN Council’s Child Advocate of the Year award has annually honored an outstanding individual or group for being extraordinarily committed to making the Great Lakes Bay Region a better place for children and families. Past recipients include Richard J. Garber, William (Bill) McNally, the dental team of Paul W. Allen, DDS, the Honorable Faye M. Harrison, AGP & Associates, Inc., Al Doner of New Executive Mortgage, Chip Hendrick, President of R.C. Hendrick & Son, Inc. and last year’s honoree, Judy Zehnder Keller of the Bavarian Inn Lodge.

Mr. Tribble is a long-time child advocate serving on the board of the Boys & Girls Club of the Great Lakes Bay Region. He was a dedicated board member and past president of the Boys & Girls Club of Saginaw County, a past chairperson and advisory board member of the CAN Council of Saginaw County, a United Way VITA program trainer, as well as a trustee for numerous community foundations. In addition, Mike served on the Boys & Girls Clubs National Board of Directors and the Home Builders Association, locally and statewide.

As an expert in tax and estate planning, Mike has assisted many local nonprofits for decades. As a way to combine two of his favorites – the Saginaw Spirit and the CAN Council Great Lakes Bay Region – Mike was the catalyst for the annual Superhero Hockey Night with the Saginaw Spirit, a benefit for the CAN Council.

“Mike’s someone who is always energized by discovering new, exciting ways where he can partner to help protect our children. On top of his decades of support, Mike continues to prioritize children’s best interests in his daily work. He truly is the best choice as our 2018 Child Advocate of the Year,” said Suzanne Greenberg, CAN Council President/CEO.

Amy R. Buben, CPA, CFE, was recognized as one of 10 recipients of the 2018 RUBY Awards presented by 1st State Bank.

Amy was honored as one the area’s brightest professionals under the age of 40 who have made their mark in their professions and are having an impact throughout the Great Lakes Bay Region.

“This award recognizes Amy’s contributions to the CPA profession, her leadership and her commitment to the community. She is disciplined, dedicated, respected by her staff and highly valued by her clients. She has a great passion to build up those around her, and she is a great ambassador for Yeo & Yeo in the community and the associations she is affiliated with,” says David W. Schaeffer, managing principal of the Saginaw office.

Amy is a Principal in the management advisory services department of the Yeo & Yeo’s Saginaw office. She leads the firm’s manufacturing services group and is a member of the tax services group. She joined Yeo & Yeo in 2006 and has over 20 years of experience working with manufacturers.

In our community, Amy is the vice-chair of Women in Leadership, treasurer of the Great Lakes Bay Manufacturing Association, and a board member for Covenant Healthcare Foundation. In 2014, the Michigan Association of Certified Public Accountants honored her with its Women to Watch Emerging Leader Award.

The RUBY Awards ceremony was held on February 27 at Apple Mountain in Freeland. Jen Carpenter of Junior Achievement nominated Amy for the award.

The “Corporate Records Service” scam has resurfaced. Michigan businesses are receiving an official-looking form called the “Annual Records Solicitation Form” from the “Michigan Council for Corporations.” Although this document looks like an official government form, the Michigan Council for Corporations is not a government agency. They are soliciting business to maintain a record of corporate shareholders and directors on behalf of the company for $150. They are not filing or otherwise satisfying any Michigan corporate requirements.

It is advised you disregard this deceptive notice as it is not from the State of Michigan, and Michigan corporations are not required by law to file corporate records with LARA’s Corporations, Securities & Commercial Licensing Bureau.

Similar deceptive solicitation mailings have also occurred in several other states. These entities operate under identical or similar names and request fees ranging from $125, $150, $175 to $239 for the completion and submittal of annual corporate records.

Legitimate notices and mailings to Michigan corporations are issued from LARA’s Corporations Division and mailed to the resident agent at the registered office address on record. When receiving any official-looking document, please review it carefully and read the small print. If you are not sure, please contact the LARA Corporations, Securities and Commercial Licensing Bureau at 517.241.6470.

If you purchased qualifying property by December 31, 2017, you may be able to take advantage of Section 179 expensing on your 2017 tax return. You’ll also want to keep this tax break in mind in your property purchase planning, because the Tax Cuts and Jobs Act (TCJA), signed into law this past December, significantly enhances it beginning in 2018.

2017 Sec. 179 benefits

Sec. 179 expensing allows eligible taxpayers to deduct the entire cost of qualifying new or used depreciable property and most software in Year 1, subject to various limitations. For tax years that began in 2017, the maximum Sec. 179 deduction is $510,000. The maximum deduction is phased out dollar for dollar to the extent the cost of eligible property placed in service during the tax year exceeds the phaseout threshold of $2.03 million.

Qualified real property improvement costs are also eligible for Sec. 179 expensing. This real estate break applies to:

Certain improvements to interiors of leased nonresidential buildings,
Certain restaurant buildings or improvements to such buildings, and
Certain improvements to the interiors of retail buildings.

Deductions claimed for qualified real property costs count against the overall maximum for Sec. 179 expensing.

Permanent enhancements

The TCJA permanently enhances Sec. 179 expensing. Under the new law, for qualifying property placed in service in tax years beginning in 2018, the maximum Sec. 179 deduction is increased to $1 million, and the phaseout threshold is increased to $2.5 million. For later tax years, these amounts will be indexed for inflation. For purposes of determining eligibility for these higher limits, property is treated as acquired on the date on which a written binding contract for the acquisition is signed.

The new law also expands the definition of eligible property to include certain depreciable tangible personal property used predominantly to furnish lodging. The definition of qualified real property eligible for Sec. 179 expensing is also expanded to include the following improvements to nonresidential real property: roofs, HVAC equipment, fire protection and alarm systems, and security systems.

Save now and save later

Many rules apply, so please contact us to learn if you qualify for this break on your 2017 return. We’d also be happy to discuss your future purchasing plans so you can reap the maximum benefits from enhanced Sec. 179 expensing and other tax law changes under the TCJA.

Yeo & Yeo was honored with Saginaw Future’s 2018 Economic Excellence Award at Saginaw Future’s 26th Annual Awards Luncheon at the Bavarian Inn Lodge in Frankenmuth on February 23. Yeo & Yeo was recognized for the expansion of its corporate headquarters in 2017 in Saginaw County. The firm was acknowledged alongside 35 other companies’ economic development projects in Saginaw County with a total impact of more than $171 million. These projects represent significant growth in manufacturing and service industries and continued investment in communities throughout Saginaw County.

Saginaw Future is a public-private alliance of area businesses, Saginaw County, the city of Saginaw, 15 local municipalities and the Saginaw County Chamber of Commerce. Saginaw Future’s strategic partners also include education, labor and government.

If you’re planning on buying a home that you one day wish to pass on to your adult children, a joint purchase can reduce estate tax liability, provided the children have sufficient funds to finance their portion of the purchase. With the gift and estate tax exemption now set at an inflation-adjusted $10 million thanks to the Tax Cuts and Jobs Act, federal estate taxes are less of a concern for most families. However, the high exemption amount is only temporary, and there’s state estate tax risk to consider.

Current and remainder interests

The joint purchase technique is based on the concept that property can be divided not only into pieces, but also over time: One person (typically of an older generation) buys a current interest in the property and the other person (typically of a younger generation) buys the remainder interest.

A remainder interest is simply the right to enjoy the property after the current interest ends. If the current interest is a life interest, the remainder interest begins when the owner of the current interest dies.

Joint purchases offer several advantages. The older owner enjoys the property for life, and his or her purchase price is reduced by the value of the remainder interest. The younger owner pays only a fraction of the property’s current value and receives the entire property when the older owner dies.

Best of all, if both owners pay fair market value for their respective interests, the transfer from one generation to the next should be free of gift and estate taxes.

The relative values of the life and remainder interests are determined using IRS tables that take into account the age of the life-interest holder and the applicable federal rate (the Section 7520 rate), which is set monthly by the federal government.

Consider the downsides

The younger owner must buy the remainder interest with his or her own funds. Also, while the tax basis of inherited property is “stepped up” to its date-of-death value, a remainder interest holder’s basis is equal to his or her purchase price. This step-up in basis allows the heir to avoid capital gains tax on appreciation that occurred while the deceased held the property.

But, in most cases where estate tax is a concern, the estate tax savings will far outweigh any capital gains tax liability. That’s because the highest capital gains rate generally is significantly lower than the highest estate tax rate.

Keep it simple

In a world where many estate planning techniques can be complicated, a joint purchase isn’t. Contact us with any questions.

Many businesses hired in 2017, and more are planning to hire in 2018. If you’re among them and your hires include members of a “target group,” you may be eligible for the Work Opportunity tax credit (WOTC). If you made qualifying hires in 2017 and obtained proper certification, you can claim the WOTC on your 2017 tax return.

Whether or not you’re eligible for 2017, keep the WOTC in mind in your 2018 hiring plans. Despite its proposed elimination under the House’s version of the Tax Cuts and Jobs Act, the credit survived the final version that was signed into law in December, so it’s also available for 2018.

“Target groups,” defined

Target groups include:

Qualified individuals who have been unemployed for 27 weeks or more,
Designated community residents who live in Empowerment Zones or rural renewal counties,
Long-term family assistance recipients,
Qualified ex-felons,
Qualified recipients of Temporary Assistance for Needy Families (TANF),
Qualified veterans,
Summer youth employees,
Supplemental Nutrition Assistance Program (SNAP) recipients,
Supplemental Security Income benefits recipients, and
Vocational rehabilitation referrals for individuals who suffer from an employment handicap resulting from a physical or mental handicap.

Before you can claim the WOTC, you must obtain certification from a “designated local agency” (DLA) that the hired individual is indeed a target group member. You must submit IRS Form 8850, “Pre-Screening Notice and Certification Request for the Work Opportunity Credit,” to the DLA no later than the 28th day after the individual begins work for you. Unfortunately, this means that, if you hired someone from a target group in 2017 but didn’t obtain the certification, you can’t claim the WOTC on your 2017 return.

A potentially valuable credit

Qualifying employers can claim the WOTC as a general business credit against their income tax. The amount of the credit depends on the:

Target group of the individual hired,
Wages paid to that individual, and
Number of hours that individual worked during the first year of employment.

The maximum credit that can be earned for each member of a target group is generally $2,400 per employee. The credit can be as high as $9,600 for certain veterans.

Employers aren’t subject to a limit on the number of eligible individuals they can hire. In other words, if you hired 10 individuals from target groups that qualify for the $2,400 credit, your total credit would be $24,000.

Remember, credits reduce your tax bill dollar-for-dollar; they don’t just reduce the amount of income subject to tax like deductions do. So that’s $24,000 of actual tax savings.

Offset hiring costs

The WOTC can provide substantial tax savings when you hire qualified new employees, offsetting some of the cost. Contact us for more information.

If you moved for work-related reasons in 2017, you might be able to deduct some of the costs on your 2017 return — even if you don’t itemize deductions. (Or, if your employer reimbursed you for moving expenses, that reimbursement might be excludable from your income.) The bad news is that, if you move in 2018, the costs likely won’t be deductible, and any employer reimbursements will probably be included in your taxable income.

Suspension for 2018–2025

The Tax Cuts and Jobs Act (TCJA), signed into law this past December, suspends the moving expense deduction for the same period as when lower individual income tax rates generally apply: 2018 through 2025. For this period it also suspends the exclusion from income of qualified employer reimbursements of moving expenses.

The TCJA does provide an exception to both suspensions for active-duty members of the Armed Forces (and their spouses and dependents) who move because of a military order that calls for a permanent change of station.

Tests for 2017

If you moved in 2017 and would like to claim a deduction on your 2017 return, the first requirement is that the move be work-related. You don’t have to be an employee; the self-employed can also be eligible for the moving expense deduction.

The second is a distance test. The new main job location must be at least 50 miles farther from your former home than your former main job location was from that home. So a work-related move from city to suburb or from town to neighboring town probably won’t qualify, even if not moving would have increased your commute significantly.

Finally, there’s a time test. You must work full time at the new job location for at least 39 weeks during the first year. If you’re self-employed, you must meet that test plus work full time for at least 78 weeks during the first 24 months at the new job location. (Certain limited exceptions apply.)

Deductible expenses

The moving expense deduction is an “above-the-line” deduction, which means it’s subtracted from your gross income to determine your adjusted gross income. It’s not an itemized deduction, so you don’t have to itemize to benefit.

Generally, you can deduct:

Transportation and lodging expenses for yourself and household members while moving,
The cost of packing and transporting your household goods and other personal property,
The expense of storing and insuring these items while in transit, and
Costs related to connecting or disconnecting utilities.

But don’t expect to deduct everything. Meal costs during move-related travel aren’t deductible • nor is any part of the purchase price of a new home or expenses incurred selling your old one. And, if your employer later reimburses you for any of the moving costs you’ve deducted, you may have to include the reimbursement as income on your tax return.

Please contact us if you have questions about whether you can deduct moving expenses on your 2017 return or about what other tax breaks won’t be available for 2018 under the TCJA.

Determine how ASC 606 will impact your organization

Yeo & Yeo CPAs & Business Consultants is pleased to announce the promotion of Jessica Rolfe, CPA, to senior manager. Her areas of expertise include audits for government entities, school districts, nonprofit organizations and healthcare organizations. Jessica leads the firm’s Nonprofit Services Group and is a member of the Audit Services Group. She has nine years of experience in Audit & Assurance, and serving the nonprofit sector.

In the community, Rolfe serves as an Allocation Panel Member for the United Way of Midland County, and is treasurer of the Tri-County Community Adjudication Program.

Learn more about Jessica.

If reducing your taxable estate is an important estate planning goal, making lifetime charitable donations can help achieve that goal and benefit your favorite organizations. In addition, by making donations during your lifetime, rather than at death, you can claim income tax deductions. But some of your charitable deductions could be denied if you don’t follow IRS rules.

3 things to be aware of

First, the recipient charity must be a qualified charitable organization: It must have a tax-exempt status. The IRS has developed a tool on its website — the Exempt Organizations Select Check — that allows users to search for a specific tax-exempt organization, check its federal tax status and learn about tax forms the charity may file that are up for public review.

Second, the timing of pledging vs. payment of your charitable contributions can affect your deduction. Why? For most taxpayers, contributions are deductible only in the tax year they’re made. So if you pledged $5,000 in October of 2017, but paid only $1,500 of your pledge to the charity by December 31, 2017, you’re allowed to deduct only the $1,500 amount on your 2017 tax return.

Third, if you donate property and receive something in return, it’s important to know the fair market value of each item. For example, if you donate a flat screen TV to your child’s school and receive two tickets to a sporting event in return for your donation, you must first determine the value of your donation. Then you may deduct only the amount exceeding the fair market value of the two tickets.

Substantiate your donations

Be aware that substantiation rules also apply when giving cash or property to charity, and they vary based on the type and amount of the donation. For example, cash gifts of $250 or more require a “contemporaneous” written acknowledgment from the charity that includes information such as the gift’s amount and date and the estimated value of any goods or services received. For smaller gifts, a canceled check or credit card receipt may be sufficient.

If you’ve made substantial charitable donations, their deductibility depends on compliance with IRS rules, which go far beyond what we’ve discussed here. When in doubt, contact us to be sure you’ve dotted all the i’s and crossed all the t’s.