Author: Debra Watkins

Donations of Unreimbursed Expenses

May I deduct as charitable contributions expenses that I incur on behalf of a charitable organization that are not reimbursed?

Per IRS Publication 1771:

If a donor makes a single contribution of $250 or more in the form of unreimbursed expenses, e.g., out-of-pocket transportation expenses incurred in order to perform donated services for an organization, then the donor must obtain a written acknowledgment from the organization containing:

    a description of the services provided by the donor

    a statement of whether or not the organization provided goods or services in return for the contribution

    a description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution

    a statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits (described earlier in this publication), if that was the case.

In addition, a donor must maintain adequate records of the unreimbursed expenses. See Publication 526, Charitable Contributions, for a description of records that will substantiate a donor’s contribution deductions.
Example of an unreimbursed expense: A chosen representative to an annual convention of a charitable organization purchases an airline ticket to travel to the convention. The organization does not reimburse the delegate for the $500 ticket. The representative should keep a record of the expenditure, such as a copy of the ticket. The representative should obtain from the organization a description of the services that the representative provided and a statement that the representative received no goods or services from the organization.
Publication 1771 also reviews the disclosure requirements of charitable organizations.

Don’t throw good money after bad

Austin Talk Radio Batters Metrorail

Not a real headline but the discussion was a good reminder of how to NOT make a decision to abandon a project.

Investors are notoriously emotionally involved in decisions that they have made.  It is almost impossible to divorce ourselves from the consequences of important decisions that we have made.  This is called  Loss Aversion.

When we have made a decision such as investing $65 million  in a Metrorail or $5000 in WholeFoods and watch the trains operate at a loss or our stock decline by half of its value, our loss aversion and emotions keep us from correctly considering our original investment as a sunk cost.  Sunk costs are non recoverable costs that force us to admit that we have made a bad decision.

Some decisions require that we abandon our prior investment and invest additional funds that will correct the decision.  One example is abandoning a website that is too expense to maintain but that cost $15,000 for a $1000 out of the box website that works great.

Other decisions require that we look at future operations but on a cash flow basis.  If an operation, perhaps a commuter train, is cash flowing, consideration of the original investment is irrelevant to the decision as to whether to continue or stop the train.  The relevant costs to compare with income from the project are the costs that will end if operations are ceased.

Finally, we might need to consider selling assets that we can’t afford to pay for even though we would lose our investment, especially if we can pay off any debt associated with the property.  Continuing to own an asset with operating losses due to mortagage payments that could be sold is also an example of loss aversion.

How much should you give?

Ron Lieber writes in the NYTimes,  April 30, about alternative computations of the amount to give to charity.    He reports the methods in the Bible and in the Koran.  He quotes Brent Kessel who wrote “It’s Not About Money” , and Peter Singer who wrote “The Life You Can Save.”  He quotes letters from Gerard Manley Hopkins, a Jesuit priest,  to Robert Bridges, both 19th century poets,  in which the priest suggests that his friend give alms to the point of personal inconvenience if he wanted to become familiar with the nature of Christian belief.  Lieber concludes with a call for more readily available payroll deductions such as the United Way facilitates.

Read the full article here.

Combs Apologizes for Rebate Fiasco

We All Deserve Answers About the Appliance Rebate Program

By Susan Combs

It is not acceptable that thousands of Texans spent hours trying to reserve appliance rebates on Wednesday, April 7, only to be met with dropped calls and an unavailable online reservation system. It is not acceptable to me or the many Comptroller employees who worked diligently to ensure mechanisms were in place to accommodate the extremely high demand we expected. And it certainly isn’t acceptable to the citizens of our state. We all deserve real answers.

With high-value rebates, a large population and limited funds, we knew not everyone interested in the program would be able to reserve rebates. We closely watched similar rebate programs in other states. Within days of seeing the experiences of Iowa and Minnesota, whose systems were overloaded, we were on the phone requiring increased safeguards from Helgeson Enterprises, the company contracted through a competitive bid process to manage our rebate fulfillment. We accurately projected the estimated traffic we thought we would receive in the first few hours. We looked closely at the contractor’s system bandwidth and infrastructure. We provided clear steps they needed to take at a minimum to prepare for Texas.

On our end, we immediately recognized the need to create our own Web front door for the contractor’s online system to provide program information and updates. We took the steps needed to handle millions of hits concurrently to our Texas Powerful Smart site atwww.TexasPowerfulSmart.org. We did it right, and our Web front door handled about 40 million hits in less than 12 hours without fail. This allowed us to provide real-time updates about the contractor’s system and direct people to our e-mail subscription service and Twitter feed for updates to keep them informed of rebates remaining and other important details.

Prior to April 7, at our request, the contractor did a test run of their system and stated that the online reservation system should be able to handle 25,000 users at a time. The wait time for those trying to access the system online was estimated by the contractor at three minutes. Dropped calls were never acceptable to us, and no one should have been kicked out in the middle of an online reservation.

However, problems with their online reservation system began immediately. With their online system unavailable, the phones were completely overloaded. Our agency took thousands of calls as well. Through a conference call on early Wednesday morning, we demanded updates from our contractor on the system status so we could pass along this information via our site and other communication channels.

By mid-morning, the contractor reported their system may have been affected by a Web attack, which consumed about 75 percent of their capacity.

The online reservation system was brought back online at 12:15 p.m., and reservations started flooding in. Just after 2 p.m., all rebate reservations were taken, and the waitlist was opened. It filled by 6 p.m. However, many still reported problems with the system.

To the thousands of frustrated Texans who experienced problems: we are as mad as you are. We are gathering information to identify the full scope of the problem. We have received feedback from more than 15,000 of you, and we are taking action.

Before the end of the day on Wednesday, we sent a letter to Thomas Helgeson, president of Helgeson Enterprises, expressing our dissatisfaction with the company’s performance and requesting specific sets of data that will help us determine whether the company is meeting its contractual obligations for items such as Web site uptime and answer time for phone calls. We also requested a specific description of the steps Helgeson is taking to avoid additional problems with rebate fulfillment.

Not one dollar has been paid to Helgeson. Payment is based on the number of rebate claims processed. This means no payment to Helgeson will be made until Helgeson begins to issue rebate checks to Texans, and we have a team actively monitoring this entire process.


Don’t Forget the Extra Sales Tax!

Generally, taxpayers may add to the table amount any sales taxes paid on:
  • A motor vehicle, but only up to the amount of tax paid at the general sales tax rate;
  • and an aircraft, boat, home (including mobile or prefabricated), or substantial addition to or major renovation of a home, if the tax rate is the same as the general sales tax rate;
  • sales tax paid on materials purchased to build a home or substantial addition or to perform a major renovation.

Motor vehicles include cars, motorcycles, motor homes recreational vehicles, sport utility vehicles, trucks, vans and off-road vehicles. Taxpayers may also include any state and local general sales taxes paid for leased motor vehicles.

Here’s a calculator:  Sales Tax Deduction Calculator.

Reservation Launch Time for Texas Appliance Rebate Program

The Texas Trade Up Appliance Rebate Program reservations officially begin Monday, April 5, at 7 a.m. CT, when consumers can receive rebate forms for select ENERGY STAR® appliances by visiting the online reservation system at www.TexasPowerfulSmart.org or calling (877) 780-3039. Texans can use the rebates to buy energy efficient appliances in eight different appliance categories and replace the same type of old, functional appliance.

Economic Recovery Payment

From the IRS website:

A one-time payment of $250 was  made in 2009 to:
  • Retirees, disabled individuals and Supplemental Security Income (SSI) recipients receiving benefits from the Social Security Administration.
  • Disabled veterans receiving benefits from the U.S. Department of Veterans Affairs.
  • Railroad Retirement beneficiaries.
The IRS did not make this payment, unlike last year’s economic stimulus program.   The economic recovery payment will be a reduction to any Making Work Pay credit for which the recipient qualifies. The Making Work Pay credit will be claimed on the recipient’s 2009 tax return filed in 2010. For more information regarding the economic recovery payment and the Making Work Pay credit see these questions and answers.

Taxpayers who can’t recall whether they received the payment may may call the automated telephone service at 1-866-234-2942 and select Option 1. When you call, you will need your social security number, birthdate, and ZIP code available.

Starting March 23, 2010, they may use the Did I Receive a 2009 Economic Recovery Payment? online tool to verify whether they received the payment. Taxpayers may also contact their respective agencies for confirmation before completing and filing their 2009 tax returns in 2010.

Tax Center to Assist Unemployed Taxpayers

The IRS has set up a web page to give additional assistance to unemployed taxpayers.  There are references to publications that may prove helpful to the unemployed.  IRS also points unemployed taxpayers toward the possibility of starting a new business.  Here’s a video that talks about what to do if you’re unable to pay (IRS uses YouTube!)