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We adopted 3 children internationally last year and just received our letter for request for more information from the IRS. For those of you who have run this race before, I have a question.
We received donations from family and friends and I deducted all of that money from our total list of expenses. However do you recommend mentioning about the donations in the info I send to the IRS? I'm just afraid if I do, I will then be expected to send documentation for each donation. I don't have a receipt for every time someone handed me a $20 bill so that's not even feasible. So should I even mention it in a cover letter or merely just list the extra expenses we incurred.
Just worrying if being "too honest" will hurt me...
Anyone have any experience with this?
Also, when you sent your receipts in, did you also send a spreadsheet or organize your paperwork in some way? I have over 100 receipts (lived in country for a month) so I want it easy to review for the tax examiner. Any suggestions from those who have gone before?
Thanks for any quick responses since I HAVE to get this done today to meet my 30 day window of time!
Thanks,
Tiffany
PS. Is it worth it to pay to fed ex this paperwork?
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The "donations" are considered gifts to you from the IRS point of view (unless you are a non-profit organization), so you don't need to provide receipts. The tax form has a line to enter information about reimbursement of expenses from an employer, but I don't think they have anything about gifts.For sending the receipts and documentation, make it as easy to understand as possible. Include a cover letter explaining the situation. A spreadsheet is probably useful too. I would suggest organizing by category. You will also need to split out the expenses per child if possible. If they were all adopted at the same time, you could just summarize the expenses and divide by 3. You can fax the documents or mail. I don't think FedEx will speed it up much, but I would get a confirmed delivery so you know it got there.
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