Tips to Keep in Mind for Taxpayers Traveling for Charity

During the summer, some taxpayers may travel because of their involvement with a qualified charity. These traveling taxpayers may be able to lower their taxes.

Here are some tax tips for taxpayers to use when deducting charity-related travel expenses:

  • Qualified Charities.  For a taxpayer to deduct costs, they must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. A taxpayer should ask the group about its status before they donate. Taxpayers can also use the Select Check tool on IRS.gov to check a group’s status.
  • Out-of-Pocket Expenses.  A taxpayer may be able to deduct some of their costs including travel. These out-of-pocket expenses must be necessary while the taxpayer is away from home. All costs must be:
    • Unreimbursed,
    • Directly connected with the services,
    • Expenses the taxpayer had only because of the services the taxpayer gave, and
    • Not personal, living or family expenses.
  • Genuine and Substantial Duty.  The charity work the taxpayer is involved with has to be real and substantial throughout the trip. The taxpayer can’t deduct expenses if they only have nominal duties or do not have any duties for significant parts of the trip.
  • Value of Time or Service.  A taxpayer can’t deduct the value of their time or services that they give to charity. This includes income lost while the taxpayer serves as an unpaid volunteer for a qualified charity.
  • Travel Expenses a Taxpayer Can Deduct.  The types of expenses a taxpayer may be able to deduct include:
    • Air, rail and bus transportation,
    • Car expenses,
    • Lodging costs,
    • Cost of meals, and
    • Taxi or other transportation costs between the airport or station and their hotel.
  • Travel Expenses a Taxpayer Can’t Deduct. Some types of travel do not qualify for a tax deduction. For example, a taxpayer can’t deduct their costs if a significant part of the trip involves recreation or vacation.

For more on these rules, see Publication 526, Charitable Contributions. Get it on IRS.gov/forms at any time.

How to Get Tax Transcripts and Copies of Tax Returns from the IRS

Taxpayers should keep copies of their tax returns for at least three years. Those who need a copy of their tax return should check with their software provider or tax preparer. Prior year tax returns are available from IRS for a fee.

For those that need tax transcripts, however, IRS can help. Transcripts are free.

Tax Transcripts

A transcript summarizes return information and includes Adjusted Gross Income (AGI). They are available for the most current tax year after the IRS has processed the return. People can also get them for the past three years.

When applying for home mortgages or college financial aid, transcripts are often necessary. Mortgage companies, however, normally arrange to get one for a homeowner or potential homeowner. For people applying for college financial aid, see IRS Offers Help to Students, Families to Get Tax Information for Student Financial Aid Applications on IRS.gov for the latest options.

Taxpayers can get two types of transcripts from the IRS:

  • Tax Return Transcript.  A tax return transcript shows most line items including AGI from an original tax return (Form 1040, 1040A or 1040EZ) as filed, along with any forms and schedules. It doesn’t show changes made after the filing of the original return. This transcript is only available for the current tax year and returns processed during the prior three years. A tax return transcript usually meets the needs of lending institutions offering mortgages and student loans.
  • Tax Account Transcript.  A tax account transcript shows basic data such as return type, marital status, adjusted gross income, taxable income and all payment types. It also shows changes made after the filing of the original return.

To get a transcript, people can:

  • Order online. Use the ‘Get Transcript’ tool available on IRS.gov. There is a link to it under the red TOOLS bar on the front page. Those who use it must authenticate their identity using the Secure Access process.
  • Order by phone. The number to call is 800-908-9946.
  • Order by mail.  Complete and send either Form 4506-T or Form 4506T-EZ to the IRS to get one by mail. Use Form 4506-T to request other tax records: tax account transcript, record of account, wage and income and verification of non-filing. These forms are available on the Forms & Pubs page on IRS.gov

Those who need an actual copy of a tax return can get one for the current tax year and as far back as six years. The fee per copy is $50. Complete and mail Form 4506 to request a copy of a tax return. Mail the request to the appropriate IRS office listed on the form. People who live in a federally declared disaster area can get a free copy. More disaster relief information is available on IRS.gov.

Plan ahead. Delivery times for online and phone orders typically take five to 10 days from the time the IRS receives the request. You should allow 30 days to receive a transcript ordered by mail and 75 days for copies of your tax return.

Tips on How to Handle an IRS Letter or Notice

The IRS mails millions of letters every year to taxpayers for a variety of reasons. Keep the following suggestions in mind on how to best handle a letter or notice from the IRS:

  1. Do not panic. Simply responding will take care of most IRS letters and notices.
  2. Do not ignore the letter. Most IRS notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes specific instructions on what to do. Read the letter carefully; some notices or letters require a response by a specific date.
  3. Respond timely. A notice may likely be about changes to a taxpayer’s account, taxes owed or a payment request. Sometimes a notice may ask for more information about a specific issue or item on a tax return. A timely response could minimize additional interest and penalty charges.
  4. If a notice indicates a changed or corrected tax return, review the information and compare it with your original return. If the taxpayer agrees, they should note the corrections on their copy of the tax return for their records. There is usually no need to reply to a notice unless specifically instructed to do so, or to make a payment.
  5. Taxpayers must respond to a notice they do not agree with. They should mail a letter explaining why they disagree to the address on the contact stub at the bottom of the notice. Include information and documents for the IRS to consider and allow at least 30 days for a response.
  6. There is no need to call the IRS or make an appointment at a taxpayer assistance center for most notices. If a call seems necessary, use the phone number in the upper right-hand corner of the notice. Be sure to have a copy of the related tax return and notice when calling.
  7. Always keep copies of any notices received with tax records.
  8.  The IRS and its authorized private collection agency will send letters and notices by mail. The IRS will not demand payment a certain way, such as prepaid debit or credit card. Taxpayers have several payment options for taxes owed.

National Ice Cream Day 2017

By Debby Winters

It is finally here! July 16, 2017!! Hip Hip Hooray! To help you celebrate National Ice Cream Day, here are a few tidbits about ice cream that you may not have already known

1- In 1984, President Ronald Reagan decreed that July would be National Ice Cream Month. And on the third Sunday of July—yes, that’s today—we celebrate National Ice Cream Day.

2- The sound of the ice cream truck is a trademarked sound: On May 21, 2013 the Australian company Breville received the trademark for the sound the ice cream truck makes, which they described as follows: The mark consists of the song “Turkey in the Straw”, which consists of a keyboard synthesizer playing pickup measure: G4 eighth note followed by F4 eighth note; first measure: E-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note followed by E-flat4 eighth note followed by B-flat3 eighth note followed by G3 eighth note followed by B-flat3 eighth note, played simultaneously with E-flat3 half note followed by B-flat2 half note; second measure: E-flat 4 eighth note followed by C5 eighth note followed by B-flat4 eighth note followed by G4 eighth note followed by B-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note, played simultaneously with E-flat3 half note followed by B-flat 2 half note; third measure: G4 quarter note followed by G4 quarter note followed by G4 eighth note followed by F4 eighth note followed by E-flat 4 eighth note followed by F4 eighth note, played simultaneously with E-flat3 half note followed by B-flat 2 half note; fourth measure: G4 quarter note followed by F4 quarter note followed by F4 quarter note followed by G4 eighth note followed by F4 eighth note, played simultaneously with B-flat2 half note followed by F3 half note; fifth measure: E-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note followed by E-flat4 eighth note followed by B-flat3 eighth note followed G3 eighth note followed by B-flat3 eighth note, played simultaneously with E-flat3 half note followed by B-flat2 half note; sixth measure: E-flat4 eighth note followed by C5 eighth note followed by B-flat4 eighth note followed by G4 eighth note followed by B-flat4 quarter note followed by E-flat4 eighth note followed by F4 eighth note, played simultaneously with E-flat3 half note followed by B-flat2 half note; seventh measure: G4 eighth note followed by B-flat4 eighth note followed by eighth rest followed by C5 eighth note followed by B-flat4 eighth note followed by G4 eighth note followed by E-flat4 eighth note followed by F4 eighth note, played simultaneously with B-flat2 quarter note followed G3 quarter note followed by B-flat3 half note; eighth measure: G4 quarter note followed by F4 quarter note followed by E-flat4 quarter note followed by quarter rest, played simultaneously with B-flat2 half note followed by E-flat2 half note.

3- Around 1832, Augustus Jackson created multiple ice cream recipes and pioneering a superior ice cream preparation technique and decoration.

4- Nancy Johnson of Philadelphia created the hand-cranked device that was the first ice cream machine in 1843. This revolutionizing the distribution and sale of ice cream throughout the United States and Canada.   It was a manual device cranked by a handle with a pewter cylinder.  Her invention, as illustrated in her patent no. 3,254 looked like the diagram below and was described as: An outer wooden pail contained crushed ice; an inner tin or pewter cylinder contained the ice-cream mix to be frozen.  A manual device cranked by a handle with a lid bolted on and the handle inserted through the top of the lid and turned to freeze the mix. The device inside attached to the handle was called a dasher. It was possible to split the inner cylinder such that 2 different ice cream flavours could be frozen simultaneously but separately.

5- Syrian immigrant and waffle salesman Ernest Hamwi has generally been credited with inventing the first edible ice cream cone at the 1904 St. Louis World’s Fair when a nearby vendor ran out of serving dishes, and the creation sparked a nationwide sensation.

6- Philadelphian entrepreneur by the name of Robert Green would regularly mix syrup and cream into his carbonated beverages in the last decades of the 1800s. Legend has it that on one fateful day, he ran out of these regular ingredients and used ice cream as a substitute, creating the first ice cream soda in the process.

7- The Oregon Research Institute in Eugene and published a study in the American Journal of Clinical Nutrition that found that when the brain craves ice cream and other high-fat/high-sugar foods, it reacts in the same way as a cocaine user’s does in a period of withdrawal.

8- In 2012, after an exhaustive survey of regional credit card transactions throughout the nation, researchers found that “Long Beachers eat ice cream a whopping 268 percent more than the average American.” Fort Worth and Dallas also scored well above average when it comes to devouring ice cream.

9- Prior to the invention of refrigeration, ice cream was a rather expensive dessert. Our nation’s first president is rumored to have once spent $700 on the delicacy in New York City over the course of one summer. Sharing her husband’s zeal, Martha Washington acquired a “cream machine for ice” in 1784 to serve ice cream to her guests at Mount Vernon.

10- Ben And Jerry wanted to buy a bagel machine but could only afford an ice cream maker, thus was born their famous ice cream.

Go get yourself some ice cream! Happy National Ice Cream Day 2017!

One Month Left for Arkansas Nonprofits to Apply for SBA Disaster Loans

FROM THE SBA:

SACRAMENTO, Calif. – Director Tanya N. Garfield of the U.S. Small Business Administration’s Disaster Field Operations Center-West today reminded Arkansas private nonprofit organizations of the Aug. 14, 2017, deadline to apply for an SBA federal disaster loan for property damage caused by severe storms, tornadoes, straight-line winds and flooding that occurred April 26 – May 19, 2017. Private nonprofits that provide essential services of a governmental nature are eligible for assistance.

According to Garfield, eligible private nonprofits of any size may apply for SBA federal disaster loans of up to $2 million to repair or replace damaged or destroyed real estate, machinery and equipment, inventory and other business assets. SBA can also lend additional funds to help with the cost of making improvements that protect, prevent or minimize the same type of disaster damage from occurring in the future.

In addition, SBA offers Economic Injury Disaster Loans to help eligible private nonprofits meet working capital needs caused by the disaster. Economic Injury Disaster Loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact. Economic injury assistance is available regardless of whether the private nonprofit suffered any property damage. Private nonprofits have until March 15, 2018, to apply for an SBA Economic Injury Disaster Loan.

SBA low-interest federal disaster loans are available in Baxter, Benton, Boone, Carroll, Clay, Cleburne, Conway, Craighead, Cross, Faulkner, Independence, Izard, Jackson, Lawrence, Madison, Marion, Mississippi, Montgomery, Newton, Ouachita, Perry, Poinsett, Prairie, Randolph, Saline, Washington, White and Woodruff counties.

The interest rate is 2.5 percent with terms up to 30 years. Loan amounts and terms are set by SBA and based on each applicant’s financial condition.

Applicants may apply online, receive additional disaster assistance information and download applications at https://disasterloan.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email disastercustomerservice@sba.gov for more information on SBA disaster assistance. Individuals who are deaf or hard of hearing may call (800) 877-8339. Completed applications should be mailed to U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX  76155.

Devil Horns Gesture Trademarkable?

By Debby Winters

In the past few months, Gene Simmons, of the famed rock n roll band Kiss, has applied for a number of trademark applications.  Simmons, one of the most successful musician-entrepreneurs in history, owns a number of other trademark registrations through his Gene Simmons Company.  The most notable of his recent filings is for the hand gesture shown below. This application was filed June 9, 2017 claiming it was for live performances by a musical artist; personal appearances by a musical artist, which has first been used in 1974 .  Simmons claimed that it became a part of the band’s act during its Hotter Than Hell tour — on Nov. 14, 1974 to be exact.

Mark Image

At the time of the filing, it was controversial as to whether Simmons was the owner of the hand gesture, as it is not only an international symbol of rock, but a perusal of photographs that predate 1974 show other rock stars using the gesture.  This is now a moot point as on June 20, 2017,  less than 2 weeks after the filing, Simmons filed an express abandonment of the mark.  It appears that he sought registration of the hand gesture itself, rather than an image or depiction of the gesture, describing the mark in the application as “a hand gesture with the index and small fingers extended upward and the thumb extended perpendicular.”  While images or stylized drawings of hand gestures can function, and be registered as trademarks, either by themselves or as part of a design mark, hand gestures in and of themselves cannot function as trademarks.

Even if they could be registered as a trademark, how would one enforce such a thing against others?  That would be virtually impossible.

Nice try, Gene, but no go.

IRS Offers Tips for Teenage Taxpayers with Summer Jobs

Students and teenagers often get summer jobs. This is a great way to earn extra spending money or to save for later. The IRS offers a few tax tips for taxpayers with a summer job:

  1. Withholding and Estimated Tax. Students and teenage employees normally have taxes withheld from their paychecks by the employer.  Some workers are considered self-employed and may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year.
  2. New Employees. When a person gets a new job, they need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from the employee’s pay. The IRS Withholding Calculator tool on IRS.gov can help a taxpayer fill out the form.
  3. Self-Employment. A taxpayer may engage in types of work that may be considered self-employment. Money earned from self-employment is taxable. Self-employment work can be jobs like baby-sitting or lawn care. Keep good records on money received and expenses paid related to the work.  IRS rules may allow some, if not all, costs associated with self-employment to be deducted. A tax deduction generally reduces the taxes you pay.
  4. Tip Income. Employees should report tip income. Keep a daily log to accurately report tips. Report tips of $20 or more received in cash in any single month to the employer.
  5. Payroll Taxes. Taxpayers may earn too little from their summer job to owe income tax. Employers usually must withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer, in a timely manner.
  6. Newspaper Carriers. Special rules apply to a newspaper carrier or distributor. If a person meets certain conditions, then they are self-employed. If the taxpayer does not meet those conditions, and are under age 18, they may be exempt from Social Security and Medicare taxes.
  7. ROTC Pay. If a taxpayer is in a ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive may not be taxable, see Publication 3 for details.
  8. Use IRS Free File. Taxpayers can prepare and e-file their federal income tax return for free using IRS Free File.  Free File is available only on IRS.gov. Some taxpayers may not earn enough money to have to file a federal tax return, by law, but may want to if taxes were withheld. For example, a taxpayer may want to file a tax return because they would be eligible for a tax refund or a refundable credit.  IRS Free File can help with these issues.

Plan Ahead for Tax Time When Renting Out Residential or Vacation Property

Summertime is a time of year when people rent out their property. In addition to the standard clean up and maintenance, owners need to be aware of the tax implications of residential and vacation home rentals.

Receiving money for the use of a dwelling also used as a taxpayer’s personal residence generally requires reporting the rental income on a tax return. It also means certain expenses become deductible to reduce the total amount of rental income that’s subject to tax.

Dwelling Unit.  This may be a house, an apartment, condominium, mobile home, boat, vacation home or similar property. It’s possible to use more than one dwelling unit as a residence during the year.

Used as a Home.  The dwelling unit is considered to be used as a residence if the taxpayer uses it for personal purposes during the tax year for more than the greater of: 14 days   or 10% of the total days rented to others at a fair rental price. Rental expenses cannot be more than the rent received.

Personal Use.  Personal use means use by the owner, owner’s family, friends, other property owners and their families. Personal use includes anyone paying less than a fair rental price.

Divide Expenses. Special rules generally apply to the rental of a home, apartment or other dwelling unit that is used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes. Special deduction limits apply.

How to Report. Use Schedule E to report rental income and rental expenses on Supplemental Income and Loss. Rental income may also be subject to Net Investment Income Tax. Use Schedule A to report deductible expenses for personal use on Itemized Deductions. This includes such costs as mortgage interest, property taxes and casualty losses.

Special Rules.  If the dwelling unit is rented out fewer than 15 days during the year, none of the rental income is reportable and none of the rental expenses are deductible. Find out more about these rules; see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).

Use IRS Free File.  Renting a vacation home can be complicated and IRS Free File can make filing a tax return easier. IRS Free File is available until Oct. 16. Taxpayers earning $64,000 or less can use brand-name tax software. Those earning more can use Free File Fillable Forms, an electronic version of IRS paper forms. Free File is available only through the IRS.gov website. You can get forms and publications on IRS.gov/forms at any time.

The Slants fought the law and The Slants won!

By Debby Winters

Should an all Asian-American rock band have the right to call themselves by what the U.S. Patent and Trademark Office termed a disparaging name? The US Supreme Court says yes. The Slants fought the law and The Slants won!

The recent Supreme Court ruling could have broad impact on how the First Amendment is applied in other trademark cases.  The USPTO initially kept the band from registering its name, The Slants, and then rejected its appeal, citing the Lanham Act, which prohibits any trademark that could “disparage … or bring … into contemp[t] or disrepute” any “persons, living or dead.”  A Federal Court sided with the band and the USPTO sued to avoid being compelled to register the name as a trademark. The Supreme Court has now weighted in and has sided with The Slants.

You may be asking why the band wanted the name in the first place. “We grew up and the notion of having slanted eyes was always considered a negative thing,” Simon Tam, the band leader, said.  “Kids would pull their eyes back in a slant-eyed gesture to make fun of us. … I wanted to change it to something that was powerful, something that was considered beautiful or a point of pride instead.” This attitude is in contrast to the Native Americans, who in 2014, asked the USPTO to cancel the registrations for the Washington Redskins because the Native Americans considered the name offensive.

This decision may lead to more marks the USPTO terms “scandalous” to ruling that allow the marks based on First Amendment grounds.  And if so, will this mean a short-term run on the Trademark Office to register offensive trademarks while you may be able to get them through?  Applications that have been rejected on the basis of Section 2(a) may have a new life for those who use or intend to use the marks in commerce. Only time will tell. Stay tuned!

 

Patents and right to privacy

By Debby Winters

As July 4th approaches and we think about our rights, like the right to privacy, we should think about how technology has changed that right. Let’s look at some recent patent applications that may limit your right to privacy just by using your smartphone.  The patent application entitled titled “Augmenting Text Messages With Emotion Information” that Facebook submitted in 2015 seems not only creepy, but also extremely invasive.

facebook patents

Photo Credit: ©USPTO.GOV

The patent application claims that by identifying one or more words in the text of the message along with the speed and pressure of typing on the keyboard that the emotion of the use can be predicted.  Do you want Facebook to know your emotions based on how hard and fast your press your phone keys? Or is this just a little too invasive into your private conversations?

What about the camera fingerprinting patent application filed recently? Heard about that one? This patent application covers a method for creating “fingerprints” that attach to particular cameras and photographs and then match those photographs with particular social media users.  Essentially, Facebook can analyze images uploaded by users and determine the unique signifiers of the cameras used to capture the images. The patent application even discusses looking at things like the user’s style of naming image files, and using that information to create “inferred” connections between the original user and other users.

A third patent application submitted by Facebook combines the camera aspect with the emotion aspect of the two just discussed. It is the emotion-detecting smartphone camera.

facebook patents

Photo Credit: ©USPTO.GOV

This technology actually spies on users through their smartphone cameras and reads the emotions on their faces as they scroll through their Facebook feeds and allows Facebook to keep a storage file of your emotional responses to serve you “better-targeted” ads, content, and other media.

 

A fourth of Facebook’s attempts to track a user’s behavior is a system for detecting boredom in users by tracking their movements as they scroll through Facebook’s app.  The technology would present users with an initial set of content items in their Newsfeed, and then track whether or not the user pauses on any of the content items for an amount of time that meets a prescribed threshold.  If a user paused on an item for five seconds as opposed to pausing for a shorter time period, Facebook can determine that you’re more interested in that content item.  Is it boredom or is the user just busier than usual?  Add this to the method for receiving information on a user’s eye placement as they scroll on the your phone and maybe that question will be answered.

Many of these patents haven’t received approval just yet, but Facebook is certainly leading the charge in innovations that put user reaction at the center of its products’ performance. For users who desire a more optimal Facebook experience, personal privacy might be a small price to pay.

Happy July 4th!