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Charitable Donations 501(c)(3) Deduction

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Donations to Charities are a tax deduction ONLY if they are a qualified organization per IRS. Click 501(c)(3) to show a map that can be researched by State. Gives lots of information.
Giving money to friends or homeless, while it might be a nice thing to do is NOT a deductible charitable donation.

GILTI Tax eff Jan 1st, 2018

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GILTI (Global Intangible Low-Taxed Income) effective January 1, 2018


Form 8992 is used to disclose the calculation. It basically is your share of Controlled Foreign Corporation (CFC)** Income which, prior to 2018, was just disclosed on Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations). It was a Balance Sheet and Income Statement. Just a disclosure, no tax. Until the profits were paid there was no tax on a personal tax return Form 1040.

          Effective January 1, 2018, this income is now taxed. The good part of that is, when you take it out later, it is not taxed.

                The final regulations (318 pages) were issued June 14, 2019.

          The Form 5471 is still required. The figures are taken from it to prepare the Form 8992.

          GENERALLY for individuals this income is taxed at the taxpayer's highest marginal rate including this income. If a taxpayer’s marginal rate is higher than 21%, in order to obtain this lower rate an election has to be made under Section 962 (just a statement included with the Form 1040).

          The above is presented more as a concept. The law is extremely complex. Many of the 318 pages also refer to other code sections that are hundreds of pages!


** CFC Controlled Foreign Corporation is when U.S. shareholders have 50 percent or more of the control of that corporation. If control is less than 50%, The Form 5471 may still apply (for disclosure) but the GILTI tax Form 8992 is not required.

Sub S Basis Reporting 2018 Forward

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2018 Form 1040 U.S. Individual Income Tax Returns that have an S Corporation K-1 are required to check a box on line 28 of Schedule E to attach a basis computation.  This applies to corporations reporting a loss, stock disposal, receive a loan repayment or DISTRIBUTION!

RMD Missed?

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RMD (Required Minimum Distribution) if not timely made is subect to a 50% non-deductible penalty!  YES, 50%
If you can show cause (illness, bad advice, the broker/banker screwed up) and that you took steps to comply just follow the instructions on Form 5329 and attach a letter of explanation.  The penalty will be due only if IRS denies it.

2019 Charitable Donations

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Taxpayers aged 70 1/2 (and older) can make Donations of up to $100,000 DIRECTLY from an IRA to a 510(c)(3) charity.
You don't get your hands on the money... it goes DIRECT.
This QCD (Qualified Charitable Distribution) is NOT TAXABLE but it DOES COUNT toward RMD (Required Minimum Distribution).