CCH CompleteTax Outlines Tax Considerations for Political Junkies

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The newly elected Congress has been sworn in, President-elect Obama is about to take the oath of office; millions of Americans are hoping that a tax break is on their 2008 tax returns for the support they've given chosen candidates

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Most of the candidates were elected on the promise of tax breaks, so a little patience may yield lower taxes, tax credits or tax deductions for 2009 or beyond

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In 2008, more Americans than ever got involved in the political process, donating hundreds of millions of dollars and hours of time to their chosen political candidates, and as income tax time looms, they want to know if there are any tax deductions they can get for their political involvement, according to tax analysts for CCH CompleteTax®, the online tax preparation and electronic filing solution for the do-it-yourself taxpayer. CCH, a Wolters Kluwer business is a leading provider of tax, accounting and audit information, software and services.

In just about every circumstance, the answer is "no," according to David Bergstein, CPA, tax analyst for CCH CompleteTax (http://www.CompleteTax.com). "We think of terms like donating and volunteering as related to charitable organizations, but political campaigns are not charities. The money you give them or the time you spend working on behalf of a campaign may help your candidate win, but it doesn't directly translate into a deduction on your tax return."

In fact, Bergstein added, charitable organizations themselves are prohibited from participating in political campaigns. This includes being barred from endorsing any candidates or making donations to their campaigns.

Among the political campaign activities that are not tax deductible to individuals are:

  • Political campaign contributions;
  • Expenses related to taking part in political campaigns such as travel and lodging;
  • Admission to political events, such as dinners, programs, presentations, parties or sporting events if proceeds from the event are intended for the use of a political campaign or candidate;
  • Admission to an inaugural ball, gala, parade or other function identified with a political party or candidate;
  • Advertising in political convention programs and other political publications; and
  • Reimbursement for unpaid time spent on political campaigns.

Even if your political involvement has crossed the line into lobbying, most of your expenses are not tax deductible, including expenses related to:

  • Influencing legislation;
  • Participating in a political campaign for or against any candidate for public office;
  • Attempting to influence the public about political matters such as elections, legislative matters or referendums; and
  • Communicating directly with covered executive branch officials (such as the President, Vice President, many Executive Office employees or Cabinet-level staff) to try to influence the official actions of positions of these individuals.

There are a few exceptions, with certain lobbying expenses being tax deductible if they are necessary expenses in carrying out a trade or business.

For example, professional lobbyists can deduct expenses they incur for lobbying on behalf of another person; although payments by that other person for lobbying activities can't be deducted. Additionally, professional lobbyists can deduct expenses for attempting to influence the legislation of any local council or similar governing body and deducting internal expenses for influencing legislation or communicating with covered executive brand officials if the expenses for the tax year do not exceed $2,000.

Don't Give Up Hope on Tax Breaks:
While political junkies may not have many tax breaks related to their political activities, there are dozens of other tax credits and deductions they shouldn't overlook as conventional taxpayers, including the recovery rebate, first-time homebuyer credit and increased AMT exemptions - and many more likely on the horizon.

"Most of the candidates were elected on the promise of tax breaks, so a little patience may yield lower taxes, tax credits or tax deductions for 2009 or beyond," said Bergstein. "Last year was about the elections; 2009 is about action and should prove to be a very active year on the tax front."

About CCH CompleteTax:
CCH CompleteTax, an online tax preparation and e-filing service for the do-it-yourself taxpayer, sets the standard in making online tax prep and e-filing easy, efficient and affordable. CCH CompleteTax offers comprehensive support to help taxpayers through each step of preparing and e-filing both federal and state income tax returns.

About CCH, a Wolters Kluwer business:
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading products are The ProSystem fx® Office, CorpSystem®, CCH® TeamMate, CCH® Tax Research NetWork™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.

Wolters Kluwer is a leading global information services and publishing company. The company provides products and services globally for professionals in the health, tax, accounting, corporate, financial services, legal and regulatory sectors. Wolters Kluwer has annual revenues (2007) of €3.4 billion ($4.8 billion), maintains operations in over 33 countries across Europe, North America and Asia Pacific and employs approximately 19,500 people worldwide. Wolters Kluwer is headquartered in Amsterdam, the Netherlands. For more information, visit http://www.wolterskluwer.com.

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Editor's Note: Members of the press interested in accessing CCH CompleteTax for review should contact Mary Jung at 773-429-0940, mtjung at msn dot com; or Leslie Bonacum at 847-267-7153, mediahelp at cch dot com.

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