January 10, 2005

We all have been watching the tragic events of the tsunami in Asia and parts of Africa.  Our good politicians want to show a kind face to the world and to help them do this, they are allowing us to donate to the tsunami victims’ aide and be able to deduct that donation on our 2004 income tax return.  If you want to help the victims and help our country look good around the world, please do so.

BUT BE AWARE:

• First, if you cannot itemize, you will not get the deduction in either year.
   
• Second, you must write that check or donate that cash before January 31, 2005, to be able to deduct it in 2004.
   
• Third, you must go through a qualified charitable organization, such as, the Red Cross, Salvation Army, Your Local Church or a Foundation set up for this purpose.  That means, you cannot just send it to someone you know who is a victim.
   
• Fourth, make sure you know the organization is legitimate.  Many are popping up as scams to get your money.
   
• Fifth, God Bless you for loving your fellow man!

Start collecting your tax forms as they arrive at your home or work.  Put them into a safe place designated for that purpose.  Even just a shoe box or envelope set aside right by the door.  Many important things start to arrive right now and you do not want to lose them.  

For example:

Your W-2’s, 1099’s, and brokerage statements.  Often the envelope says “IMPORTANT

TAX INFORMATION” on the outside.  Watch for 1099-DIV,INT, B, etc.  Sometimes your 1099-DIV is attached to your January dividend check or stub.  Watch for late arriving AMENDED 1099’s.  

The tax form or label to be affixed to your tax form.  This helps processing and secures your  information at the IRS, state, or local tax office.

This year you will receive a new form for the elective Sales Tax Deduction in the form of a table.   Watch for it in the mail.  Most Michigan residents will not elect sales tax unless they purchased one or  more of the qualified additions to the table such as a new vehicle, boat, cycle.

Your church, synagogue, or temple will send out your annual report of total contributions. ANY donations exceeding $250 require you to have a written receipt in hand before filing your tax return.  Start requesting, if  you have not received by the first week in February.

Your mortgage company will send you a 1098 Form showing total interest paid and taxes if you pay them through escrow.  The local governmental unit will send you the tax receipt if you pay direct.  Also, watch for your new tax assessment notice which starts getting mailed around March 15.  Last year’s is the one you need this year, but if you cannot find it, you can still use the information from this year’s.   You can also call for the figure.

Social Security will send you a record of payments and Medicare withheld.

State and Local governmental units will send you a statement showing the refund amount they sent you or credited to your 2005 estimate.

Universities, colleges and trade schools will send a statement of tuition if it qualifies for credits.   Also, student loan interest paid statements.

Put ANYTHING you think may qualify into that box or envelope.  If you do not ask, you might miss out on a deduction.

Another new thing which you should see more and more is Check 21.  Your bank or credit union has been sending inserts.  Not only do you have to watch cash float because checks will clear quicker, but you may not get all your cancelled checks back.  If you are in business, this can be a major problem.  You must provide copies of checks but the new electronic substitute check qualifies.  Some banks or credit unions may charge you for that service, just as you may have had to pay for your cancelled checks.  Just make sure you get that service if you deducting any business expenses.

Last, but not least, call now for your appointment to get your taxes prepared or drop off what you have in that box or envelope no later than mid-February.

Sincerely and going the extra mile,
Millian M. Toms

Call Millian Toms at 248-541-2052 with any questions.
or milliantoms@aol.com

Millian M. Toms is a Royal Oak-based CPA and business advisor. She is also an active member of the community including The Optimists and Greater Royal Oak Chamber of Commerce. 

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