The US Treasury Department and the Internal Revenue Service released draft regulations on Thursday that change how the federal government will treat donations to charitable organizations that generate state government tax credits. As written, the draft would apply to many programs in Arizona that provide a state tax credit when a taxpayer makes a donation to certain nonprofits. This includes the AZ credits for Fees paid to public school, credits for contributions to private school tuition organizations and credits for Qualifying Charitable organizations.
The rule is not final, but this change could potentially affect the federal tax deductibility of your charitable tax donations that occur after Aug. 27, 2018!
In Arizona, you may currently qualify for a dollar-for-dollar tax credit on your state taxes. In addition, this also may qualify as a charitable deduction on your federal income tax return. If this proposed rule is finalized, it’s possible the federal deduction will no longer apply for donations made after Aug. 27, 2018.
A public hearing is scheduled for Nov. 5, 2018. Because this is still in process, the amendment is not yet final, and we do not know if the proposed date of applicability — Aug. 28, 2018 — will take effect. This legislation will not affect your ability to take the Arizona state tax credit. It would affect only your ability to claim the deduction on your federal taxes as well.
Many of the larger charities affected by this proposed law have already sent out emails to their prior contributors, so you may have been alerted to this issue already. The taxpayers affected by this change are those that will have more than $24k in itemized deductions for 2018 ($12k for single filers). If you fit in this category, you would benefit from making your state tax credit contributions by Monday instead of waiting until December. If you are unsure if you are in this category or have any questions about this proposed law change, please email me or give me a call.
Glenn Conover, CPA, CCIFP | Tax Partner
Office | (480) 500-6333 Cell | (602) 616-7245
Email | firstname.lastname@example.org
Nevada passed legislation in 2016 creating a new Commerce Tax on all businesses doing business in NV. The Commerce Tax is based on gross revenue and is calculated using a fiscal period of July 1 through June 30 regardless of the entities normal fiscal year. Everyone doing business or licensed to do business in Nevada must file the form annually by 8/15.
The tax only applies if the business has more than $4,000,000 of NV gross revenue. If gross revenue is less than $4,000,000 a simplified filing is allowed. We know that Nevada is sending out "Welcome" letters to businesses that are licensed there.
Penalties can be assessed for failure to file the return but at this time it appears that penalties are based on tax due, so if no tax is due, there will be no penalties. Conover Asay suggests that you file the required forms even if there is no penalty as the State of Nevada may have other consequences for non-filing that may result in a termination of your licenses.
If you have any questions concerning the new filing requirement, here is the link to the Nevada Department of Taxation or call Glenn Conover at 480-500-6333.
Glenn Conover, CPA, CCIFP
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