The Tax Professionals Blog

Contribution to a donor advised fund is a way to warehouse funds in a year in which the donor has an unusually high income (and can benefit from a large charitable deduction) to satisfy the donor's social obligations to make charitable contributions in future years, without incurring the expense of setting up a private foundation and satisfying annual filing and other private foundation requirements.

The GOP has released its tax reform structure, without a lot of detail (it is being left to Congress to determine), and as we all know the devil is in the details. But remember this is only a proposal and a lot can happen before it becomes law, assuming it even gets to that point. Here are some highlights of the proposal:

Every so often tax practitioners will encounter a client who has won a noncash prize or vacation trip from a game show, or won a car or even a house from the purchase of a charity raffle ticket.  Whatever the noncash prize or the source of the prize, one thing is for certain, the winner must pay taxes on the fair market value (FMV) of the prize (Reg. Sec. 1.74-1(a)(2)).

There are several requirements to qualify for the Earned Income Tax Credit (EITC) (IRC Sec 32), one of which is to have earned income.  Many taxpayers and tax preparers alike overlook the fact that long-term disability benefits received prior to the minimum retirement age (generally age 55) are treated as earned income for purposes of the EITC computation (IRS Publication 4808, Disability and EITC).