Getting a letter from the IRS requesting clarification or more information is enough to strike fear into any taxpayer’s heart. So the news that the IRS is stepping up the number of audits wasn’t particularly welcome.
One area that IRS officials are taking a closer look at is the deductions you take. If you take too many deductions relative to your income, it can raise a red flag on your return.
The Wall Street Journal recently detailed the story of a woman who tried to write off $45,000 of old clothes she donated. Tax court later knocked that deduction back to $9,000.
Don’t overstate what you’re giving away to charity. In fact, you should document exactly what you’re giving away, how much you paid for it and how much it’s worth today. Take the extra step and use your digital camera to capture the number of bags of clothing, furniture and other items that you’re giving away.
That way, if the IRS asks for more information about your donation or your deduction, you’ll be able to provide it.
With practical, informative consumer advice, I’m Ilyce Glink, News-Talk 750 WSB