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Comolli Tidbits

August Tidbits

Donating Your Services to Charity

If you plan to donate your services to charity this summer and have to travel as part of the service, then some travel expenses may be deductible when you file your tax return next year. Below are some tax tips that you should know if you travel while giving your services to charity.

  • Qualified Charities.  In order to deduct your costs, your volunteer work must be for a qualified charitable organization. Most groups must apply to the IRS in order to become qualified – check their IRS status by using the “Select Check” tool on ( Churches and governments do not need to apply to the IRS.
  • Out-of-Pocket Expenses. You may be able to deduct some of the expenses incurred when donating your services. This can include the cost of necessary travel. All costs must be unreimbursed, directly connected with the services, expenses you had only because of the services you gave, and not personal, living or family expenses.
  • Genuine and Substantial Duty.  Your charity work has to be real and a substantial portion of the trip. Therefore, you can not deduct expenses if you only have nominal duties or do not have any duties for significant part of the trip.
  • Value of Time or Service.  You can not deduct a value for your services nor income lost while you work as an unpaid volunteer for a qualified charity.
  • Deductible travel. The types of expenses you may be able to deduct include: air, rail and bus transportation, car expenses, meals and lodging costs, taxi or other transportation costs between the airport or station and your hotel.
  • Nondeductible Travel. Example of non-qualified travel is deducting your costs if a significant part of the trip involves recreation or a vacation.

For more information on these rules, see Publication 526, Charitable Contributions on the IRS website: .


Continuing Education Tax Credits

If you, your spouse or a dependent are heading off to college in the fall, you may be able to claim a tax credit on your federal tax return. Here are some key IRS tips that you should know about:

  • American Opportunity Tax Credit. The American Opportunity Tax Credit is worth up to $2,500 per year for an eligible student. This credit can only be claimed for the first four years of higher education. Forty percent of the AOTC is refundable, which means if you are eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any taxes.
  • Lifetime Learning Credit.  The Lifetime Learning Credit is worth up to $2,000 on your tax return and there is no limit on the number of years that you can claim the LLC for an eligible student.
  • One credit per student. You can only claim one type of education per student on your tax return each year. If more than one student qualifies for a credit in the same year, you may claim a different credit for each student. For instance, you can claim the AOTC for one student, and claim the LLC for the other.
  • Qualified expenses. You may use qualified expenses, including the costs you pay for tuition, fees and other related expenses for an eligible student to figure your credit. You can refer to for more on the rules that apply to each credit.
  • Eligible educational institutions. Eligible schools are those that offer education beyond high school and includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify, ask your school if it is an eligible educational institution or see if your school is on the U.S. Department of Education’s Accreditation database.
  • Form 1098-T. You should receive Form 1098-T, Tuition Statement, from your school by Feb. 1, 2016. This form reports your qualified expenses to the IRS and to you, bear in mind, this amount may be different than the amounts you actually paid. For example, the cost of your textbooks may not appear on the form, but you may still be able to include those costs when you figure your credit. You can only claim an education credit for the qualified expenses that you paid in that same tax year.
  • Nonresident alien. If you are in the United States on an F-1 Student Visa, tax rules will generally treat you as a nonresident alien for federal tax purposes.  To find out more about F-1 Student Visa status, you can visit U.S. Immigration Support as well as Publication 519, U.S. Tax Guide for Aliens to learn more about claiming the education credits.
  • Income limits. These credits are subject to income limitations and may be reduced or eliminated, based on your income.


Key Tax Facts about Home Sales

In most cases, gains from home sales are taxable but in some cases, you may not have to pay taxes. Below are ten facts to keep in mind if you sell your home this year.

Exclusion of Gain.  You may be able to exclude part or all of the gain from the sale of your home if you meet the eligibility test. Parts of the test involve your ownership and the use of your home. You must have owned and used it as your main home for at least two out of the five years before the sale date.

  1. Exceptions May Apply.  See, Publication 523, Selling Your Home or call our office to find out exceptions to the ownership, use and other rules. One exception applies to persons with a disability and another applies to certain members of the military. That rule includes certain government and Peace Corps workers. Exclusion Limit.  The most gain you can exclude from tax is $250,000. This limit is $500,000 for joint returns. The Net Investment Income Tax will not apply to the excluded gain.
  2. May Not Need to Report Sale.  You may not need to report the sale to the IRS on your tax return if the gain is not taxable.
  3. When You Must Report the Sale.  You must report the sale of your home on your tax return if you can not exclude all or part of the gain. You must report the sale if you choose not to claim the exclusion and if you get Form 1099-S, Proceeds From Real Estate Transactions.
  4. Exclusion Frequency Limit.  Although, generally you may exclude the gain from the sale of your main home only once every two years, there are some exceptions to this rule.
  5. Only a Main Home Qualifies.  If you own more than one home, you may only exclude the gain on the sale of your main home. The home that you live in most of the time is considered your main home.
  6. First-time Homebuyer Credit.  Special rules apply to your sale if you claimed the first-time homebuyer credit when you bought the home.
  7. Home Sold at a Loss.  If you sell your main home at a loss, you can not deduct the loss.
  8. Report Your Address Change.  After you sell your home and move, update your address with the IRS. To do this, file Form 8822, Change of Address. You can find the address to send it to in the form’s instructions on page two. If you purchase health insurance through the Health Insurance Marketplace, you should also notify the Marketplace when you move out of the area covered by your current Marketplace plan.


Important Date

Calendar-year corporations and partnerships on extension are due by September 15th.

Third quarter federal and Massachusetts estimated tax payments for individuals, trusts, and calendar-year corporations are due by September 15th. NH BET estimated payments are also due.

Contact Info

Comolli & Company, P.C.
45 Stiles Road, Unit 208
Salem, NH 03079
Phone: (603) 898-3322
Fax: (603) 898-6322