Yes, It's Tax Deductible, but...
When donating to your spiritual organization, following the spirit of the tax law isn't good enough if you want to avoid the IRS audit teams that tend to lean on the letter of the law. So you can no longer just put a five or ten dollar bill in the collection plate each week. You must write a check to the church for the $5 or $10 each week, or you must take advantage of the church's "envelope" system, which will provide you with a written receipt at the end of the year.
And I'm just getting started...
My tax fiefdom
Over the years, several clients have called me after receiving and reviewing their finished return to tell me, "You forgot to deduct your fee on my Schedule A".
Fees paid for preparing income tax returns are deductible as a miscellaneous expense on Schedule A. But the total of your allowable miscellaneous expenses must be reduced by 2% of your adjusted gross income. If 2% of AGI is more than your total allowable miscellaneous expenses you do not get a tax deduction.
What I do now to avoid this comment is list my tax preparation fee on the appropriate line on all Schedule As, along with any other miscellaneous expenses, and subtract the 2% of AGI to show that "0" is allowable.
The tax man isn't the only service provider in your life who isn't quite as deductible as you might think he is.
Medical expenses are only deductible to the extent that the total exceeds 7.5% of your AGI. If your total allowable medical expenses for the year are $5,000 and your AGI is $50,000 you can deduct only $1,250. If medical expenses were only $3,000 you would get no tax benefit from these expenses.
And casualty and theft losses are only deductible if the net amount, after any insurance reimbursement and a $100 IRS per incident "deductible," exceeds 10% of AGI.
There are a few items that are deductible whether or not you itemize -- like qualified tuition and fees and IRA contributions -- but even these are "phased out" or disallowed if your AGI, or a modified AGI, exceeds a certain amount.
So yes, it is deductible, but...all this goes to prove that the answer to just about any question concerning income taxes is "it depends." If someone tells you, or you read somewhere, that an item is tax deductible, check with your tax professional to evaluate whether it's tax deductible for you.
--By Robert Flach
Robert Flach is an expert with almost 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.