greenie how much can i say i donated in clothes/etc and not get audited?
Isn’t the max $500?
^No, there’s no limit to non-cash charitable contributions. (Actually, there is. It’s 50% of your gross income. So if you make $100k per year, you can give away $50k.)
But if it’s over $500 in value, you have to provide a written description of the donated property. And if it’s over $5,000, then it has to be appraised by a qualified appraiser.
In other words, that worthless old computer monitor that you dropped off at Goodwill is worth $499.99.
^thanks greenie.
what happens if i “misplace” the receipt when audited?
The deduction gets disallowed, and they’ll refigure your tax.
And you can expect to get many more audits in the future. Why should they audit a new guy when they have can audit you? After all, they know that you break the law. You’re low-hanging fruit, now.
Well that’s good to know.
May the Force be with you Greenie.
haha not yet not yet!!!
Yo Greenie, can I get money from the government for claiming my uncle’s girlfriends dog? My uncle says he is not going to claim him, so not sure if I can. It’s free government money, right? I understand this strategy is known as an animal shelter. How many dogs do I have to claim to register as Head of Pack? Can my dog, Obi-wan, chair my grandfather’s trust?
Thanks, I know I have a lot of questions.
I can’t give any more advice without remittance. If you won’t pay, then I guess Obi Wan can owe me.
Yo, folks. Check out this article regarding Roth Conversions and Recharacterizations.
http://ultimateestateplanner.com/2015/01/01/art-roth-recharacterizations/
Basically, you should convert your Traditional IRA to a Roth IRA and pay the taxes on it now. Then, you’ll have 20 months of a “free look” to see if the conversion worked in your favor. If it didn’t, then you can recharacterize the IRA (turn it back into a Traditional IRA) anytime before October 15, 2016.
EG - Say your IRA is worth a measly $100,000. (Hacksaw, right?) You convert the entire $100k to a Roth IRA and pay a 25% tax rate, or $25k. Then, in October 2016, you notice that your balance is $130k, then you file your tax return as it is, because your “real” tax rate is 25/130, or 19.2%.
If, however, your IRA declines in value to $75k, you can recharacterize it (“undo” the Roth Conversion), and pay zero taxes on it. (Because you wouldn’t want to pay $25k on a $75k investment, or a 33.3% tax rate.)
An even better option for those of you who have high balances in your IRA’s - Turn a big IRA into several small IRA’s. Then you can convert each one with the option of recharacterizing them.
EG - Say your IRA balance is $300k. You only want to convert $100k of that to a Roth. So you do this–turn your $300k IRA into threen different $100k IRA’s, each with different investments (oil in one IRA, healthcare in another, technology in the third), and convert all of them to Roths. Then, In October 2016, you can look at each IRA and see which one performed the best. Then you keep that one as a Roth, and recharacterize the other two. This ensures that you pay the lowest “real” tax rate possible.
Why do you do this? Because the IRS won’t let you cherry-pick which assets in the IRA you want to recharacterize. (The article explains.) But if you split it up between different IRA’s (with different account numbers), then you can (legally) get around the rules.
So, in this case, if the technology fund was flat, the healthcare fund blossomed to $130k, and the oil fund decreased to $75k, then you would recharacterize the “tech-fund IRA” and the “oil-fund IRA”, and leave the “healthcare-fund IRA” as the Roth.
Then, of course, you would immediately take the oil-IRA and convert it to a Roth, expecting the $75k IRA to increase in value. And the circle of life continues.
And I’m terribly disappointed that nobody laughed at my joke.
The sucky thing is coming up with the cash to do the conversion. Use year-end bonus perhaps.
^True.
Also, you have to stay on top of this. If you do the Roth Conversion in January 2015, you have to remember to re-assess your accounts in October 2016 and file your return (or file an amended, if you’ve already filed). If you don’t, you lose all the benefit.
Also, as I was thinking about this last night, I realized that the investments that were most likely to benefit from the conversion/recharacterization scheme were also probably the least likely to benefit from the tax deferral.
That is, the most volatile assets that you expect high fluctuations in price would be small- and emerging-markets equities. These are also the assets that pay the least in dividends, so they’d be ideal for a taxable account, not an IRA. And the coupon-paying bonds that you have in your IRA probably won’t fluctuate in price very much.
Oh well.
^Not if long-term cap gains get taxed at 28% like someone wants…
^Don’t forget about the vanishing step-up-in-basis-at-death, too…