Tax Attic

Jerry Coon

Recently, I was asked to participate in a new program at Rockford High School coordinated by Sarah Young, one of the school’s counselors. The ACT Prep program involved a variety of area people, sixteen in total, sitting on panels each talking to juniors about his/her life and professional experiences. The panels were grouped by separate career interests. For example, those interested in pursuing a career in business were included in the business panel. Those interested in pursuing a career in the graphic arts had a panel of experts in that field. The juniors had completed a questionnaire that would help them as they make career decisions and guide them as they choose a college to attend. We told our stories and the students were able to question us. We then listened as the students gave a synopsis of their personal questionnaires and we were able to question them. I was very impressed with the questions that the students asked us and I was also impressed by their answers to the questions that we asked. In my opinion, this is another fine example of what places the Rockford Public Schools at the top of the class of schools. I’m sure each of the panel members was happy to give a day to the juniors. I wish each of the juniors the very best as they go about choosing a school and making important life choices.

As we approach the end of the year, the over-all number one deduction that American taxpayers use to reduce their year-end tax bill is to make a charitable contribution. A recent poll stated that 81% of the responders planned to make charitable contributions before the end of the year. Even though America has a varied reputation through-out the world and we are not universally liked, when a tragedy occurs we are usually among the first responders. The American Red Cross is known through-out the world for its speed in getting help to devastated locations. Think for a moment of the Haiti earthquake; the Japan tsunami; and Hurricane Sandy. American charitable organizations, for the most part, were on-site before government agencies

bringing food and supplies. These organizations run on money collected from Americans across the board. We give billions and it can be deducted on a tax return if the appropriate rules are followed. Let’s go over those rules.

Most importantly, a deduction can be claimed only if taxpayers can prove they made the deduction. While putting a $20 bill in the offering plate or mailing that $20 bill to a favorite charity is making a charitable contribution, how does a taxpayer prove he put $20 in the plate or mailed that $20 bill? For many years now, the Internal Revenue Service has consistently ruled that cash contributions are not an allowable deduction because there is no proof of deduction. How can a taxpayer obtain proof of deduction? One way is to write a $20 check to the church or charity. For that amount of deduction, the cancelled check is sufficient proof. Another way is use a church envelope so the church keeps track of the amount contributed and provides the taxpayer a letter of contributions made. A cancelled check or a letter is sufficient for contributions up to $250. For a single contribution of $250 or more, the cancelled check is not going to be sufficient proof of deduction. The taxpayer must have, in his possession, a letter of contribution that is dated before the tax return is filed but dated no later than the due date of the tax return. Without a timely-dated letter, the deduction will not be allowed. The fact is that the IRS has won several court cases in which the deduction was not allowed because of either a missing or late dated letter. Americans are great contributors and making a contribution is a tremendous way of potentially lowering an income tax bill. Following the rules will make the deduction allowable. This is Jerry Coon signing off.


Jerry Coon is an Enrolled Agent and

a Registered Tax Return Preparer.

He owns Action Tax Service

on Northland Dr in Rockford.

Contact Jerry through his website:

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