Ensuring Charitable Contributions are made to Qualifying Organizations

Tax Act

The Internal Revenue Service (IRS) grants organization eligibility in receiving donations and giving them a tax-deductible status.  Qualified organizations meet requirements upon obtaining the status that allows taxpayers to claim charitable deductions.  You may ask the organization about their status in which they should be able to provide you with details.  There is also a listed publication (IRS Publication 78) available through the IRS that lists qualifying organizations.

The most common way in determining if the organization is qualified is to review organization types.  There are 5 general types of organizations that will have an assigned status such as a 501(c)(3) or other similar that makes the organization qualify:

Community foundations, trusts and organizations organized with specific purposes including religious, charitable, educational, literary, scientific, animal/human cruelty and sports related organizations.

  1. Organizations for war veterans including posts, trusts, foundations and auxiliaries organized in the United States.
  2. Many fraternal societies in relation to organization types mentioned in number 1 may be consider a qualify organization.
  3. Cemetery nonprofits and cooperation’s.
  4. A political subdivision or Indian tribe government that performs government actions. This may include donations made to the police department toward a reward in solving a crime or an organization that collects voluntary contributions for the social security trust fund.

Examples of organizations include church ministries, temples, charitable organizations such as the Red Cross, nonprofit educational groups such as the Boy/Girls Scouts, medical research organizations, public parks and civil defense organizations.  The IRS provides detailed information on contributions made to organizations outside the United States. Donations made are usually listed as an itemized deduction on your federal income tax form.  There are limitations based on your income of how much you can claim.  It is a good idea to obtain a receipt or documentation from the organization to use upon filing.  Many organizations do this automatically upon receiving your donation.

If your donation is goods or property, the value is determined based on fair market value when the donation was made.  If you volunteered a certain number of hours, they may also count as a deduction as long as they work performed was with a qualifying organization and you have proper documentation that shows logged hours. It is important to understand the value of charitable donations since the amount you contributed may vary from the amount you report in the form.  Many charities will mention what the tax deductible portion of your donation will be.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to umbrella companies .

Tax Deductions Can Help To Improve Your Bottom Line

Tax Act

Small Business Often Overlooks Tax Deductions

You can have a successful tax season in your small business if you plan all round the year so that the deductions are maximized. This requires that tax matters should be kept in mind at all times, and you must constantly look for methods of reducing your bottom line, while continuing the profitability of the company.

Expenses for Start-Up

The expense of starting a business is quite often overlooked by small businesses and this can give one quite an advantage when the tax season is being considered. It is possible to deduct the expenses incurred for overhead,marketing and other expenses that are related and this can be done for a period of five years after starting the business. However the deduction of such expenses is only allowed after you have actually started the business and cash flows have commenced.

Education and Training Has To Be Continuous

A continuity in training and education, makes you eligible to deduct the expenses incurred for this. Attending a conference on new trends for treatment of cancer in horses allows a veterinarian who specializes in treating horses to deduct the expenses of attending that conference. As the conference is related to the field in which the veterinarian is practicing this seminar can be a part of the deduction form the yearly tax. However if he is not practicing in that field and only treats smaller animals, he would not be eligible for any deduction. The rules for the classes that qualify the deduction are quite strict.

Fees for Professional Services

Any professional fees that you pay to your accountant can be deducted from taxes.If however the work is for future years, the benefit has to be spread out over the term envisaged. If you have hired an architect for designing a building that may take two years to construct,the architects fees have to be spread over the period during which the building construction takes place.

Use your Home Office as a Tax Deduction

Use your Home Office as a Tax Deduction in 2009

There are certain requirements but if you work from home and have an office in the home, you can deduct the space along with your other business expenses on your 2008 tax filing. There are types of use needed to be able to take this very helpful business deduction. First, you use the space exclusively and regularly for your business. Or two, you use the space as storage for business inventory on a regular basis.

Deduction Computation and Reporting

The deduction is a percentage of your overall home expenses based on the square footage of the office divided by the total square footage of your home. If you operate your business with a loss than your expenses will be limited. To report the tax deduction complete form 8829 and transfer the deduction to your Schedule C line 30.

Property Tax Changes

You probably know about taking deductions to reduce your tax liability. To be clear, deductions are not the same as tax credits – deductions are applied to your earned income before calculating taxes, and thus reduce the amount on which you are taxed. Tax credits are more valuable, and are a direct credit towards the tax that is due.

When you do your taxes each year, you can either take a standard deduction, or you can keep a record of tax deductible expenses and choose to use that if it is greater. For 2008 the standard deduction is $5450, or $10,900 if married filing jointly.

It seems that many people I speak to have not heard that this year you can claim at least some of your property taxes as a deduction, even if you do not itemize your expenses. The law allows you to add your real estate taxes to the standard deduction.

There is a limit of $500, or $1000 for joint filers, so it can save you paying taxes on $1000 of your income. This is all part of the plan to stimulate the housing market.