Category Archives: Nonprofit

Cancer Charity Scam Targeting Our Soft Spots

Types of charityCancer Charity Scam Targeting Our Soft Spots

This was a well-orchestrated, insidious, cancer charity scam targeting our soft spots.  Did you contribute to The Cancer Fund of America, Cancer Support Services, the Children’s Cancer Fund of America or the Breast Cancer Society?  All are registered in Arizona and Tennessee and operated by James Reynolds Sr. and his family. This scheme goes back to 1987 and is one of the biggest charity fraud cases to ever occur in the U.S. Continue reading →

New Standard Mileage Rates Now Available; Just Announced

OdometerNew Standard Mileage Rates Just Announced by IRS ; Business Rate to Rise in 2015

WASHINGTON — The Internal Revenue Service today issued the 2015 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

 

  • 57.5 cents per mile for business miles driven, up from 56 cents in 2014
  • 23 cents per mile driven for medical or moving purposes, down half a cent from 2014
  • 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after claiming accelerated depreciation, including the Section 179 expense deduction, on that vehicle. Likewise, the standard rate is not available to fleet owners (more than four vehicles used simultaneously). Details on these and other special rules are in Revenue Procedure 2010-51, the instructions to Form 1040 and various online IRS publications including Publication 17, Your Federal Income Tax.

Besides the standard mileage rates, Notice 2014-79, posted today on IRS.gov, also includes the basis reduction amounts for those choosing the business standard mileage rate, as well as the maximum standard automobile cost   that may be used in computing an allowance under  a fixed and variable rate plan.

Notice 2014-79 provides the optional standard mileage rates for substantiating the amount of deductible expenses for using an automobile for business, moving, medical, or charitable purposes.  For 2015, the standard mileage rates are 57.5 cents for business use of an automobile, 14 cents for use of an automobile as a charitable contribution, and 23 cents for use of an automobile as a medical or moving expense.

Notice 2014-79 also provides the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

The rules for using the optional standard mileage rates to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.

Notice 2014-79 will be in IRB IRB 2014-53, dated December 29, 2014.

Important Tax Date – February 28

FOR ALL BUSINESSES – TAX FILING INFORMATION

CAUTION TAX FORMS NEEDED!File information returns (for example, Forms 1099 for certain payments you made during 2013.  There are different forms for different types of payments. Use a separate Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to summarize and transmit the forms for each type of payment. See the General Instructions for Certain Information Returns for information on what payments are covered, how much the payment must be before a return is required, which form to use, and extensions of time to file.

If you file Forms 1097, 1098, 1099, 3921, 3922, or W-2G electronically, your due date for filing them with the IRS will be extended to March 31. The due date for giving the recipient these forms generally remains January 31.

All businesses.

Give annual information statements to recipients of certain payments you made during 2013. You can use the appropriate version of Form 1099 or other information return. Form 1099 can be issued electronically with the consent of the recipient. Payments that may be covered include the following.

  • Cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish.
  • Compensation for workers who are not considered employees (including fishing boat proceeds to crew members).
  • Dividends and other corporate distributions.
  • Interest.
  • Rent.
  • Royalties.
  • Payments of Indian gaming profits to tribal members.
  • Profit-sharing distributions.
  • Retirement plan distributions.
  • Original issue discount.
  • Prizes and awards.
  • Medical and health care payments.
  • Debt cancellation (treated as payment to debtor).
  • Cash payments over $10,000. See the instructions for Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.

This information is available in IRS Publication 509 – Tax Calendars for Use in 2014

Part II Tips : Substantiating Tax Deductions for Charitable Contributions

Bradford Tax Institute
The Bradford Tax Institute is one of the many sources we network with to stay on top of all the latest changes and updates to tax code and laws.

KEEP GOOD RECORDS!

When you give to charity, you win twice, first by supporting good organizations, and second by claiming valuable tax deductions. We leave the choice of charitable entity to you, and instead focus on record-keeping practices that maximize your charitable contribution deductions. To deduct cash, check or other charitable gifts, keep bank records or written communication from the charity showing

  • the name of the charitable organization,
  • the date of the contribution, and
  • the amount of the contribution.

For a detailed guide on record-keeping based on amount and type of charitable contribution, see the table at the end of this article.

Personal v. Business Deductions

Personal charitable deductions alleviate your tax burden and add to your bottom-line. However, business deductions are more valuable than personal charitable deductions.

Thus, whenever you have a choice between a business and a personal deduction, go for the business deduction.

For example, with a business deduction on Schedule C of your Form 1040, you save both self-employment taxes, and phaseout taxes caused by a multitude of AGI limits.

If you operate as a corporation, you gain with charity payments as business expenses because you are using pre-tax money for the charity rather than after tax deductions.

Here’s one corporate owner example. Say you are going to give $10,000 to a charity. If you earn the money on a W-2 in your capacity as an owner-employee, you pay payroll taxes on the earnings before you can give the $10,000 to the charity. On the other hand, if your corporation can claim the $10,000 payment to this charity as a business expense, you avoid the payroll taxes and either you (if you are an S corporation) or the corporation (C corporation) gets the deduction.

Souce: Bradford Tax Institute

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Part I : Tips Substantiating Tax Deductions for Charitable Contributions

SUBSTANTIATING CHARITABLE CONTRIBUTIONS

Larger IRSMany charitable organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with section 170. Most eligible organizations are listed in Exempt Organizations Select Check (Pub 78 database). Continue reading →

Nonprofit Organizations Conducting Campaign Activity

CAUTION TAX FORMS NEEDED!REPORTING REQUIREMENTS SPOTLIGHT NAMES OF CONTRIBUTORS and AMOUNTS

Back on December 31 our post on What You Need to Know about NFP 501(c)(4) organizations outlined the changes, including a new definition in 501(c)(4) social welfare organizations.

Beginning January 1, 2014 the Government Code relating to campaign activity was amended to add reporting requirements for “reporting nonprofit organizations” that engage in campaign activity.

Government Code Section 54964.6 was added to require reporting nonprofit organizations – that engage in political activity – of specific amounts to:

  • File FTB 3589 with CA FTB and post on the nonprofit’s Internet website the identity and amount of each specific source or sources of funds it receives for campaign activity. (As of this posting, Form FTB 3589 is not available, and will not be available until 2015.  You should contact your tax professional or the Franchise Tax Board.)
  • Deposit into a separate bank account all “specific source or sources of funds” it receives.
  • Pay for all campaign activity from that separate bank account.
  • Provide a description of the campaign activity.
  • Report the identity and amount of payments the organization makes from the required separate bank account.