Opinion Pieces

A common question tax professionals receive is "what tax documents do you need?"  We have compiled a short list of items that are needed.  As preparation moves along, however, additional documents may be needed.

1. Prior three years tax returns.  Our firm starts with the first year, and requests additional as needed.

2. Copy of the taxpayer's Driver License, or any other form of identification.

3. Did you buy, dispose, or hold any cryptocurrency?

4. Any and all tax forms received for the tax year that is being prepared (W-2, 1099-R, Schedule K(s), etc.)

5. Did you have or maintain a bank account in a foreign country?  If so, the date of the highest bank balance for the tax year.  Also, the financial instituion, bank address, account number.  This is required to properly fill out Form Fincen 114.

6. Did you sell or buy a house?  Closing settlement sheet is needed.

7. A smile and less stress.  We know taxes, let us take the burden of filing away from you.

This article only covers the small $300 above the line charitable deduction. I have been wanting to write on this item as early as the first return I filed this year. Why? Because what government would be unwise to remove a small $300 above the line deduction that:

1. Helps nonprofits receive more donations 

2. "May" help those who would need those donations

To be fair here, the above the line deduction was for tax years 2020 and 2021 and for taxpayers who only itemized. Prior, charitable contributions were deducted if the taxpayer itemized (and were subject to limitations).

*I use the word “May” because some nonprofits use donated funds to pay salaries, expenses, etc. Nothing is free in this country. 

Tax years 2020 and 2021:

Single filer taxpayers were able to claim a $300 above the line charitable contribution(s), thereby reducing the taxpayer’s taxable income (Line 12b of 2021 Form 1040). Married Filing Jointly taxpayers were able to claim a $600 above the line charitable contribution(s).

Tax year 2022:

For 2022, line 12b of 2022 Form 1040 was removed due to Congress not renewing the particular tax provision. So, we should ask ourselves, why? I don’t have that answer. But, fact is a fact and a truth is a truth. Fact and Truth – taxpayers are no longer able to reduce their taxable income by $300 (Single) or $600 (Married Filing Jointly). 

My opinion:

I don’t think they should have removed this key deduction. To play devil’s advocate, we could possibly argue to remove in order to increase tax revenue and pull our country out of debt (ie: remove tax savings - which increases taxes – use increase of taxes to reduce debt). 

However, I would argue, this would not be the case. When was the last time the IRS was audited? When was the last time our government reduced their spending and stuck with an actual budget? We all know the answers to these questions, because, yet again, they will most likely increase the debt ceiling. 

Approximate US National Debt – OVER 31 TRILLION DOLLARS

When I was a young lad I often hear the phrase “No taxation without representation.” 

There is some truth to that.

We look back at when US Citizens started to pay the first income tax.