Tax deductible donations
The main characteristic of charity is that it is a non-profit status. The eligibility should be first documented in the Internal Revenue Service earlier than the organization has the ability to solicit charitable gifts or donation in a certain country or state. Small churches or charity that has yearly income for about $5,000 is not required to apply for tax exemption. The Council of Better Business Bureaus stated that a certain organization that is soliciting memberships and contribution will surely fall under the following taxes:
- Internal Revenue Code 501 (c) (4)
In this classification, it actually handles the organizations inside the lobby of governmental bodies in behalf of a particular cause. It also works in social welfare activities. A certain group can also incorporate in local employee associations, fire departments, and civic organizations. The contributions under this category are not a deductable just like in charitable donations.
The groups who are exempted on it are similar groups and volunteer fire departments who are collecting funds that they will use in public purposes and other veterans who are still covered by this code. Some professional’s say that it can be subtracted the same as the expenses in business when they are required to pay their business tax.
- Internal Revenue Code 501 (c) (3)
Under this code, the groups that are included on it are scientific, educational, literary, charitable, religious and also those who are helping international or national proletarian sports competitions, testing the safeties of public places, and avoidance of cruelty to animals and children.
When a certain organization is exempted in the tax deduction, it doesn’t mean that their gifts will be immediately included in the tax deductable. For instance, the gifts which they will give to charities that it located in the foreign countries are always included in the United States income tax form. Even though the donations for charity are included in tax-deductibles, it is officially determined through its foundation status.
This code comes out in three main designations, and these are:
- Private foundation
In this designation, the private foundation will get the most income from the endowments and investments. The money from these two will use in giving award to the several groups who really deserve it.
- Public charity
The public charity will instantly receive a great amount of income from the government or public.
- Private operation foundation
The private operating foundation is one of the private foundations that donate lots of assets to charity. They also provide grants to some charities that are near in their place.
- Internal Revenue Code 501 (c) (6)
In this code, the boards and trade associations are covered by it. Aside from that, business leagues, chambers of commerce, and real estate are still covered by this code. According to the IRS, the contributions under this code from organizations are not really deductable just like to charitable donations in the federal taxes. However, these will be deducted to the expenses in business when they are required to pay the tax of their business.
How A Good Accountant Can Help You Minimize Your Taxes
People who are making mistakes in filling their taxes are growing in numbers. Other typical mistakes include filing and submitting inappropriate address, utilizing incorrect tax table and filing status, and more. These mistakes can actually cost you either higher tax refund or payment more than the amount you actually owe.
There are services offered by professionals that can help you handle your taxes but these typically charge fees. However, these services can help eliminate your confusion and stress and can result to proper filing of taxes, reduce the possibility of costly mistakes and minimize your taxes.
Minimizing your taxes can be an ideal way to ease your worries and financial burden. It can somehow be difficult and expensive to settle and pay back your taxes while trying to keep up with your current taxes. Seeking professional help from an accountant is viewed to be as a positive way of learning more about relief programs that are available and apply for any financial tax assistance.
What Accountant Can Do For You?
Aside from helping you minimize your taxes, accountant can also do the following for you:
- Makes it easy for you to file your tax return on minimal cost except in some cases that practice finances are ultimately straightforward. However, hiring accountants in preparing your tax forms can be beneficial for various reasons.
- Some says that hiring accountant will just cost you more especially when paying for service fee. But with an accountant’s expertise, you will be suggested with proven techniques on how you can minimize your taxes. A good accountant has sufficient knowledge about rules, exceptions and complexities of tax laws.
- Working with a trusted accountant helps minimize costly errors when filling. In events that clients get audited, a good and reliable accountant can give the most appropriate advice with regards to the best ways of presenting your case.
- Aside from preparing documents in a given tax period, your accountant can also recommend tax-saving strategies all throughout the year. Tax law sometimes changes and this makes timing for certain deductions and expenses important.
- An accountant can also help you choose plans and options that perfectly match your present financial situation.
- If you are self employed, own a business or have rental properties, a good accountant can assist you in finding opportunities to minimize your taxes by depreciating real estate or business assets.
- If you are thinking on selling some of your real estate properties, your accountant can help you utilize like-kind exchange in minimizing taxes on the gain of real estate assets that you are opting to sell.
When it comes to minimizing your taxes and dealing with all other tax-related concerns, hiring an accountant seems to be the best option you can take. You can find competent and highly capable accountant by doing an online research or seek for referrals and recommendations from trusted friends, families and colleagues. Look for a Certified Public Accountant for this gives you the assurance of credibility in their respective profession.
Effective Tips on How to Make Your Taxes Lower
Every tax payer desires to know how to reduce tax payments. Instead of giving false tax details, try to seek help from the experts. There are multiple ways on how to reduce your taxes. You just have to familiarize each method to have a successful result.
The Adjusted Gross Income (AGI) is a key element in recognizing your taxes. This affects your financial life outside of taxes such as mortgage lenders, banks and college financial aid programs. With great significance of AGI, you have to start your tax planning here. Simply ask yourself, what goes into your AGI? This is your income from all sources minus the adjustment incomes. If you have a high total income, you will also have a high AGI. It means that the more money you generate, the more taxes you will pay and vice versa.
To reduce your taxes, the best way that you can do is to lessen your income. You can do this by contributing money to any retirement plan. Your contribution reduces your income and that lowers your tax bill. In addition, you can also reduce your AGI through several adjustments to income. These adjustments are deductions. You just have to include a student loan interest paid and any related expenses. For additional guide, here are the other ways on how to make your taxes lower before the end of the year:
- If you are paying an estimated income tax to the country you reside in, you can pay your 4th quarter estimated ahead of time. You can do this through paying it in December vs January of the succeeding year. This can help in increasing your state income tax deduction.
- If you have real estate taxes that are due on February of the succeeding year, you can have the payment in December. Through this, you will increase your real estate tax deduction.
- Most tax payers take the benefits of holiday seasons. December is a month of gift giving and sharing. Like others, you can make a donation to a recognized charitable organization. This scheme can also help in reducing your tax.
- In case you want to buy any device for your business, you have to make that purchase in December instead of January. This can help in reducing your tax for the current year.
- If you are working for an employer and have a yea-end bonus, you can ask your employer if they could give your bonus in the beginning of January instead of December. This can help in avoiding a high tax pay for the current year.
Upon knowing the different tips on how to reduce your taxes, you don’t have to worry about your tax bills. You can easily pay your tax bill because of its low charges.
Reducing your taxes can be easily done. You just have to think of the best solution to your financial concern. By considering the above tips, expect that you will be surprised upon receiving your tax bills. So, don’t ignore the above tips and learn how to reduce your taxes now!
Top 7 Ways on How to Make Your Taxes Lower
Do you want to reduce your taxes? Then, you are on the right track! Whether you have a high or low monthly income, it would be easy for you to reduce your taxes. How can you do it? To answer this question, simply read this article.
There are several ways on how to make your taxes lower. To guide you, here are the top seven tips you shouldn’t miss to consider:
- Purchase a Car: If you purchase a car between February and December, you can deduct local and state sales taxes. In case you are living in a state that doesn’t have a sales tax, you can still have a tax break if your country imposes a flat charge on the purchase of automobile or a charge based on the cost you pay.
- Sell Losing Investment: Capital losses are commonly used to compensate gains. In most cases, there are almost $3,000 of the net loss that can be deducted against your income. Any excess loss is also carried forward to the succeeding years.
- Take the Benefit of Your Flexible Account: Contributions to a flexible spending account prevent social security and income tax. Most employers need to use your FSA money by December or March of the following year. Through this, you are on a way to spend the money in your account before its deadline.
- Maximize Your Tax Credits and Deductions: Tax credits can reduce your tax bill. If you give to a 401(k) or other retirement-savings plan, you are qualified for the retirement saver’s tax credit. This can help in trimming your tax bill for almost $1000.
- Give to a Charity: If you are planning to share your blessings, you can schedule it every December. This can help in reducing your tax bills for the current year. Just make sure that you indicate the charitable contributions in an itemized way. You can also include out-of-pocket costs to support a charity.
- Maximize Tax Breaks: This is applicable for self-employed. If you are self-employed, make sure that you make the most of the tax breaks. You can deduct the cost of equipment you use in your business like computer or other devices. You can also deduct a part of rent or mortgage for your private owned business.
- Monitor Your Medical Expenses: Having huge medical expenses can lead to a lower tax bill. However, it is quite tough to get much of a break for health expenses. You are only qualified for the tax break if you itemize your deductions.
These various tips on how to make your taxes lower are proven effective. So, don’t ignore these tips. Before filing your tax details, make sure that you know what you are doing. If you need help, you are free to ask assistance from any expert.
With your knowledge about lowering your tax bills, you have the chance to save great amount of cash. So, start considering the above methods and see how much you can save from your tax bills.
Time for Taxes – How to Get Organized?
Tax time organizing helps you to stay away from misplacing essential documents and receipts. This scheme can also help in reducing your stress level because you don’t have to speed up to get the tax prepared. Like other people who keep on organizing tax time, you can also save more cash because you won’t charge a higher fee.
With great benefits of organizing tax time, you will encourage to practice this scheme. The main question is, how can you organize your tax paperwork? The answer is very simple. To give you some hints, just take the following tips as your guide:
- Throw Away Outdated Information: It means that you have to get rid of any unnecessary or outdated draft copies. The typical examples of these are catalog you did not request, ATM receipts, airline ticket stubs, credit card receipts, greeting cards and old newspapers. In case you want to secure these items, you can buy additional filling cabinets for your stuff.
- Work Out Your System: To do this, you have to decide what you need to keep for taxes. You also need to understand what needs to be saved. The common examples of these are paycheck stubs, bank statements, tax returns, and warranty information. You also need to keep investment statements and home improvement receipts.
- Get Everything Organized: To do this, you need to make a checklist. You just have to indicate the items you need when filing your taxes. Some of the usual documents that you need to set aside are the W-2s from your employers, 1099-DIV, 1099-B forms, 1099-MISC forms and a lot more. You also need to consider your deductions. Just maximize your refund by ensuring that you will get the deduction that you deserve.
- File Your Documents in a Safe and Appropriate Place: You have to move your previous tax returns and related documents to archive files in a safe and appropriate place. Then, make sure that you put a label on each folder or box. As advised, always keep the up-to-date information in your central filing cabinets.
- Ask for a Help: If you have lots of things to be accomplished, you need to hire an expert. Just make sure that you hire a professional and reliable bookkeeper. This expert can help in handling your receipts, bills and statements.
Similar with other people, you can also allow your bookkeeper to use software. An accounting software program can help in making the task easier and effective.
As you have noticed, organizing tax time doesn’t include a complex step. You also don’t need to spend more money. If you already knew how to organize your documents, you don’t have to hire an expert. Through this, you can save more cash. But, if you need a full assistance, always depend on a trusted and knowledgeable bookkeeper.
Do you want to experience stress-free tax filing? Then, start organizing your tax time right away! Then, you will witness how it helps you. You just have to follow the above tips and everything will be fine!
What is a Tax Lawyer used for?
With taxes being a major and probably eternal part of our lives, it comes as no surprise that people are interested by them. Generally speaking, based on their interaction or influence on the actual taxation system, people fall in several categories:
- People who have no influence on taxes (most of us)
- People who decide which taxes stay and which ones go (usually government)
- People who can influence which taxes go and which ones stay (government, people …)
- People who study taxes from an economical perspective
- People who study taxes from a juridical perspective
What is a Tax Lawyer?
A Tax Lawyer is someone who has studied the various tax laws present in a community (country usually). Generally speaking, this is a subcategory of the law school. A Tax Lawyer is expected that upon graduation, to have deep knowledge of the entire taxation system in that particular community. Because in most countries the taxation is different, pretty much like the entire legal system, it is usually hard for someone who has studied law and taxes in one country to apply that knowledge in another. Of course, the core elements will always remain, but it is the variations that count within each country.
Basically a tax lawyer will have studied almost all the common laws and taxes from around the world and their major variations. They have deep insights on the whole taxation background and can use it whenever they are required to.
What is a Tax Lawyer used for?
So where and why is a tax lawyer used? Well, let’s assume that you bought a house. Someone decides to sue you because you never paid taxes on it. This is where tax lawyers come in. They handle the defense or the prosecution of people involved in tax problems. The law is often misleading and interpretable, so if you are aware of all its flaws, exceptions and stipulations, you can make a lot of money in this industry. Since taxes will most likely be here forever, this is not the kind of problem that will soon disappear. Everyone at some point will face a taxation problem. If you think you have been wronged, or your wronged the community by choice or by accident, you will most likely need a tax lawyer. Of course you can always chose to represent yourself, but the lack of knowledge in the field will guarantee your lose.
How to minimize taxes?
Taxes have been around in their primitive forms since people have started to gather in cities and villages. Although taxes have transformed a lot throughout history, their purpose remains the same – to take a small percentage of money from the citizens and use them to for community growth. Although this was the main purpose, taxes today also serve to better distribute the money within community.
Understanding the concept
The concept of taxes is very simple. The community government imposes some taxes on various things in order to collect some money from its citizens. Wealthy citizens will have to pay more as they own more things and therefor it is assumed that they can spare more money. The percentage is the same most of the time. The government of the community uses the money to invest back in the community. Or at least this is how it should be.
How to minimize taxes?
But since taxes first appeared, people were obliged to pay them. And if not paying them would usually risk in various measures taken against the citizen, a new way of reducing the taxes paid was searched. It is very clear today that you will never be able to not pay taxes. But what you can do is reduce how much you pay.
- Knowledge and information – The first step in trying to minimize your taxes is to spend some time and get informed. Which taxes are there that could directly related to me? Which are the taxes that I am currently paying and why? Which taxes I will have to pay whatever I do? This first step is usually research and it is by far the most important one. Do this poorly and you might even get in trouble with the law.
- Individual analysis – After you have done your research, start an individual analysis of yourself or your household. Look at what you own. First of all look at the things you will always have to pay taxes for like property. Whatever you do, you will have to pay for those. Of course, if you have 3-4 cars and you only use 1, you could consider either selling them or de-registering them as cars. The most important taxes are the ones that only apply to certain criteria so try and see whether or not you could stop checking up those criteria.
- Staying within the legal limits – Never go against the law. This is why prior research is vital.
Understanding Your Sales Tax Obligations
There are a lot of types when it comes to systems of sales tax. The main difference is if the main taxpayer is the seller or the purchaser.
There are states imposing the tax on the seller and pass it eventually on the purchasers but on the other hand, some states are imposing the tax to the purchaser together with the seller. They are now the ones who are liable and have the responsibility of collecting the tax and sending it to their specific states. Or sometimes, the liability of the tax is being shared by both of the purchasers and the sellers.
Getting familiar with taxable events
A tax can be triggered by any of the retail sale existing in the state. In the past few years, the states are only limiting their collection of taxes to retail sales and properties which are personally tangible. But recently, they have now expanded their scope like leasing transactions and other services.
Recognizing some of the common exceptions to tax
All retail sales are taxable unless there is an exemption implying that the purchaser has established their right for tax exemption.
Tax computing
Gross receipts are also used in computing the tax. They mostly prefer the full amount paid by the purchaser to the seller rather than the product’s net profit.
Tax obligations
Aside from the above mentioned information regarding sales tax, there are still tax obligations you should know whether you are paying the right amount of tax, if you are handling it correctly or if you are putting the right tax on your products and services as a businessman.
If you will not be complying properly to your tax obligations then you might encounter some problems about it. It should be one of your top most priorities.
Here are the things that you need regarding tax obligations as a businessman:
Registration
Your tax obligation should start from registering properly your business in the government. Secure all the permits for sales so that you will be allowed to make taxable sales. Through this, you will also know how much of the sales tax that you need to pay from your retail sale.
Collections
Be honest in collecting sales taxes from your customer. You can plan for the accounting plan of your business’ sales taxes. Another tax obligation that you should know, be well- informed when you will collecting tax because some customers already have claims for tax exemptions.
Payments as well as returns
Once you have already collected the sales taxes, remit it immediately to appropriate agencies for taxes. Don’t waste time in remitting the tax because you might use it for other purposes that should not be the case.
You should have professional knowledge and sales taxes guidance
You can seek help from an accountant or a tax professional to know more about the tax system and tax obligations for your business to grow properly
The Bottom Line
Knowing about tax is a responsibility of both the seller and the purchaser. The seller should take note on how to manage and handle the sales taxes properly and when it comes to the purchaser, don’t be afraid to ask questions regarding the involved that you need to pay for it is for your own good and pay taxes properly.
Taxes – Social Security Contributions
The Social Security Contribution refers to the payment due for any eight hours or more of work every week. This contribution is payable with reference to any week in which a person is employed. It means that the employers are responsible to pay the total contribution due, both their own share and the share deducted from the employed person’s remuneration.
This Social Security tax is applied to income related to labor. Therefore, every employee and self-employed entrepreneur is required to pay into Social Security through Social Security contribution or tax. For most tax payers, Social Security contributions are deducted by their employers from each paycheck. In case you are self-employed, you are required to file Schedule SE with your income tax returns.
Since everyone needs to pay Social Security contribution, you have to know how to calculate your income tax and social security tax. Personal income taxes are dependent on various variables. The typical examples of these are filing status, sources of income, withholding rates, number of dependents, and itemized deductions. However, some income items are not subject to personal income tax but are subjected to FICA. This is a tax for both employer and employee.
To expand your ideas on how to calculate your income and social security taxes, follow the succeeding tips:
- Compute your Adjusted Gross Income: It means that you need to compute the income you received during the year. The common examples of these are wages, dividend income, gains from the sale of stock, annuities, income from partnerships, and a lot more. Depending on your level and sources of income, a part of your Social Security benefits may be taxed. The total of your overall income will be subtracted to some adjustments like student loan interest and IRA contributions.
- Find Your Taxable Income: Personal income tax rates differ from one person to another. To use the latest IRS tax table, you can go to the IRS website and look for your taxable income. You also need to find the column for your filing status. Just take note that the IRS tax table cannot be utilized if your payable income is $100,000 or more.
- Calculate the Social Security contribution of FICA: This is calculated using a specific percent on employee wage. The pretax contributions to your retirement plan and employer paid adoption charges are subject to Social Security rates.
In case you are not aware with the different rules of Social Security System, you are free to ask assistance from any expert. Through this, you can easily know the exact Social Security contribution you need to pay.
Like other contributors or payers, you can also use online guides. Since there are several websites that explain the different facts about Social Security contributions, it is easy for you to understand what you really want to know.
Whether you are employed in a certain company or managing your own business, you have to know how to calculate your own Social Security contribution. So, instead of thinking about your contribution, start computing it. Just follow the above tips and prepare your Social Security tax payment.
Not Every Sale is Taxable
What is sales tax?
Sales tax is considered as the direct tax being imposed to the different services and products that you purchase. The tax’s amount is typically the sales price’s percentage.
Sales taxes are also imposed by the different states used for transactions that are occurring in their specific areas and borders. A triggering event like the retail sale’s consummation enabling the sales tax of most states to kicked in.
In the recent year years, the states are already contented in limiting their taxes for retail sales only including properties which are personally tangible but came to a point of expanding their scope to leasing transactions as well as with other services.
Types of sales taxes
- Seller privilege taxes or the vendor taxes
- Taxes on consumer excise or sales
- Taxes on retail transactions
What services and products are tax exempted?
Not every sale is taxable. There are services and products that are considered tax- free or tax- exempted. Just like in Rhode Island, clothing is not being charge of any sales tax.Some of the states have tax exemptions on admission sales, gas sales, transportation sales, charges from professional services, periodical sales and a lot more.
The collection of the sales tax is depending on the tax laws of your specific state. You can seek help from a tax professional to know whether a certain purchaser is really exempted from paying sales taxes or how to be informed if you are exempted as a buyer.
Business which are non- profit may be exempted from paying a specific amount of sales tax. This is made possible by filing a “Sales Tax Exemption Certificates”. Without this kind of special certificate, the businessman cannot be exempted from sales taxes.
The “Sales tax exemption certificates” can also be used for other reasons depending on each state’s taxing authorities. This could include the following:
- Exemptions for agricultural products
- Exemptions on Native Americans, on the locality or in the state
- Government exemptions and a lot more.
Why is it a need to pay your tax?
It is a need to pay your taxes because it is where the government mostly get the money to sustain services and for the welfare of the citizens.
The government uses your taxes in supporting health care, social security, national defense as well as social services including housing and food stamps. It provides funds for public schools, national highways and a lot more.
But there are questions being imposed like why is there a need to pay tax if people can just pay for what they use individually? The answer to this is no one can afford it because you will be paying for a certain service that is beyond your paying ability. If the price of the service is very expensive but your paying ability is not enough, a bigger problem might occur. How would you be able to pay for it?
The tax system is based on the people’s “ability to pay”. If a certain individual is earning more money, then the higher the tax they will paying, but once you are only earning less of what the basic is then you will also pay lesser amount of tax.
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