Author: Barbara Carr

KT Insights
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Tax Tips: Charitable Contributions

Roughly nine out of every ten taxpayers take the standard deduction instead of itemizing.  In an effort to encourage people to give to charitable organizations, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 allows a charitable deduction up to $600 (married filing joint) or $300 (single) for all qualified cash donations made in 2021 regardless of whether or not the taxpayer itemizes.  This deduction lowers both adjusted gross income and taxable income.  The cash donations need to be made to qualifying tax-exempt organizations to be deductible.  Taxpayers are still required to keep receipts for any cash donations over $25.  If the taxpayer itemizes in 2021, the charitable donations will be reported on Schedule A and are not limited to $300/$600.

For those who do itemize, if elected, qualified charitable contributions are now limited to 100% of adjusted gross income in 2021.  Historically, charitable contributions have been limited to 20-60% of adjusted gross income depending on the type of contribution and organization.

Consult with your tax professional at Ketel Thorstenson about this or other tax matters because each situation is different. Don’t navigate the difficult and ever-changing tax codes and legislation on your own.  Ketel Thorstenson CPAs and tax professionals receive advanced training and continuing education all year long to keep our service on the forefront of the tax industry. Call us today for guidance on tax planning, tax return preparation, and tax legislation affects or questions.

March 1, 2022
| Barbara Carr
KT Insights
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Work Opportunity Tax Credit (WOTC): Extension to November 8,2021

The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment.  In order to get this credit, the employer must submit a completed Form 8850 to the Department of Labor within 28 days of the eligible employee’s start date.  By submitting this form, the DOL is certifying the individual is a member of the targeted group.

There is a significant opportunity for 2021: The certification deadline has been extended to November 8, 2021, for two of the targeted groups: designated community residents and qualified summer youth.  If you have hired someone in one of these targeted groups between January 1, 2021 and October 9, 2021, you have until November 8 to submit Form 8850. 

A designated community resident is between the age so 18 and 40 and lives in a designated empowerment zone or a rural renewal county.  Oglala Sioux Tribe (parts of Jackson and Bennett Counties and all of Shannon County) is a designated empowerment zone.

The rural renewal counties in South Dakota are Aurora, Campbell, Clark, Day, Deuel, Douglas, Faulk, Grant, Gregory, Haakon, Hand, Harding, Hutchinson, Jones, Kingsbury, Marshall, McPherson, Miner, Perkins, Potter, Sanborn, Spink, Tripp, and Walworth.  Carbon and Niobrara in Wyoming are also rural renewal counties.  https://www.irs.gov/instructions/i8850#idm139643608287296

Qualified summer youth are at least 16 years old but under 18 on the date of hire or on May 1, whichever is later; only worked between May 1 and September 15; and resides in an empowerment zone or renewal community (see above).

If you have hired employees that live and work in this counties, it would be worth taking advantage of this extension!  The WOTC is equal to 40% of up to $6000 in wages paid to individuals in their first year of employment and work at least 400 hours.  A reduced credit of 25% is available for individuals that worked 120-400 hours.

In today’s tight labor market, businesses have had to dig deeper to find employees. As a reminder, although not eligible for the extension, the WOTC is also available to employees hired from the following targeted groups:

  • Qualified Veteran
  • Ex-Felon
  • Vocational Rehabilitation Referral
  • Qualified IV-A Recipient
  • Supplemental Nutrition Assistance Program Recipient
  • Supplemental Security Income Recipient
  • Long-Term Family Assistance Recipient
  • Qualified Long-Term Unemployment Recipient

Contact the professionals at Ketel Thorstenson with any of your work opportunity tax credit questions.

October 5, 2021
| Barbara Carr
KT Insights
 |

Tax Tip: Charitable Contributions

Roughly nine out of every ten taxpayers take the standard deduction instead of itemizing.  In an effort to encourage people to give to charitable organizations, the CARES Act now allows up to $300 charitable deduction for all cash donations made in 2020 regardless of whether or not the taxpayer itemizes.  This deduction lowers both adjusted gross income and taxable income.  The cash donations need to be made to qualifying tax-exempt organizations in order to be deductible.  The taxpayers are still required to keep receipts for any cash donations over $25.  If the taxpayer itemizes in 2020, the charitable donations will be reported on schedule A and they are not limited to $300.

Consult with your tax professional at Ketel Thorstenson about this or other tax matters because each situation is different. Don’t navigate the difficult and ever changing tax codes and legislation on your own.  Ketel Thorstenson CPAs and tax professionals receive advanced training and continuing education all year long to keep our service on the forefront of the tax industry. Call us today for guidance on tax planning, tax return preparation, and tax legislation affects or questions.

February 17, 2021
| Barbara Carr