September, 2006 Newsletter

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David M. Kaufmann, CPA

1466 Adobe Falls Way,

Fuita, CO 81521
Voice: 720.493.4804
 

Email: contact2@kaufmann-cpa.com

Contribution Deduction Recordkeeping Change

These changes to the charitable contribution rules were hidden in the Pension Protection Act of 2006.  There are other changes than the ones listed below.  The ones listed below are likely to hit a large percent of taxpayers.

Monetary Contributions

 After 8/17/06 to deduct a cash payment to a charity you would need a letter from the charity stating the name of the charity, the date of the contribution and the amount.  This spells an end to deducting the small cash payments made to organizations like the Salvation Army.  The solution is to write a check to the charity.  Clearly this will be a pain when dealing with the very small contributions.

 Noncash Contributions

1. The items donated must be in good used condition or better.  Our Recommendation: In an age of cheap digital photography, take pictures of the noncash contributions.

2.  Congress has asked the IRS to come up with rules for items of minimal value.  Used socks and undergarments fall into this category. [In the discussion of this part of the law the subject of Bill Clinton's donated underpants came up.  This donation happened when he was governor of Arkansas.]

Phishing in Denver

 Denver is rated as the 3rd most risky city for identity theft.

 I have seen an increase in phishing attempts that look like they are from trustworthy banks.  Naturally, these are not coming from banks.  Con artists are the source of these emails.

The idea is to make you think that the bank needs updated personal information from you.  The email contains a convenient link that will take you to a bogus Website that looks just like the bank's Website.  Never click on these links!  If you need to go the a bank's Website, type in the Web address (URL), and bookmark the page for your convenience.

Take this extra step to make sure that the Website belongs to your bank. At the bank's logon screen, enter an invalid username and password.  The true Website should then display a screen showing that you entered a bad username and password.  If that is the case, there are good chances that this is a valid Website.  If the Website doesn't give you a nasty bad username warning, exit out of your browser ASAP.

Telephone Excise Tax Refund For Everyone

 Anyone that paid long distance excise tax after 2/28/2003 and before 8/1/2006 can have those taxes refunded on your tax returns.  There will be an easy and a time consuming way to compute this refund amount.

 The Easy Way

 The IRS will let you use a standard refund based on your 2006 personal exemptions.  The refund will be $30 for 1 exemption, $40 for 2 exemptions, $50 for 3 exemptions and $60 for 4 or more exemptions.

The Time Consuming Way

Add up your excise taxes paid for the 41 months after 2/28/2003 and before 8/1/2006.

Circular 230 Disclosure

To ensure compliance with requirements imposed by the IRS, we inform you that (i) any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.