Monday, November 25, 2019

Make Sure Your Donations are Tax Deductible

It’s that time of year when taxpayers are thinking about how they want to give back, and many taxpayers will want to donate to a charity that means something to them. The IRS has a tool that may help them make sure their donations are as beneficial as possible.

Tax Exempt Organization Search on is a tool that allows users to search for tax-exempt charities. Taxpayers can use this tool to determine if donations they make to an organization are tax-deductible charitable contributions. 

Here are some things to know about the TEOS tool:
  • It provides information about an organization’s federal tax status and filings.
  • It’s mobile device friendly.
  • Donors can use it to confirm that an organization is tax-exempt and eligible to receive tax-deductible charitable contributions.
  • Users can find out if an organization had its tax-exempt status revoked.
  • Organizations are listed under the legal name or a “doing business as” name on file with the IRS.
  • The search results are sortable by name, Employee Identification Number, state, and country.
  • Users may also download entire lists of organizations eligible to receive deductible contributions, auto-revoked organizations and e-Postcard filers.

Taxpayers can also use the Interactive Tax Assistant, Can I Deduct my Charitable Contributions? to help determine if a charitable contribution is deductible.

Source: The IRS

Monday, November 18, 2019

Filing 1099's

The deadline for issuing 1099’s to independent contractors is approaching.  Do you know who you’ve paid & how much?  Most people don’t usually start thinking about issuing 1099’s until January, but it’s not too early to start now.  

Here are a few steps you can take to prepare for this deadline:
  • Gather all W-9’s that have been received
  • Make a list of all non-corporations that were paid more than $600 for services or rent in 2019
  • Track down any missing W-9’s
  • Gather any IRS notices you received regarding past 1099’s filed

If you use QuickBooks to track your finances, reconciling your bank and credit card accounts can help you determine an accurate number for your independent contractor payments.

1099’s need to be filed by no later than January 31st, 2020.  A 1096 needs to be filed along with most types of 1099 forms.

Because there is no extension to this tax deadline, the process can often get frantic.  Don’t let that be you this January, and start preparing today.

Wednesday, November 6, 2019

Apply for Tax Exempt Status

Some taxpayers think simply creating a nonprofit automatically means an organization is tax exempt. There’s more to it than that.

To become a tax-exempt nonprofit, there are few things the group must do up front. An organization must determine whether it’s a trust, corporation or association. They then must apply for tax-exempt status with the IRS and be approved. This process includes these steps.

1. Gather documents about the organization

An organization applying for tax-exempt status must have organizing documents.  Each application must be accompanied by an exact copy of the organizing documents, except for Form 1023-EZ filings.

These documents include:

  • Articles of incorporation for a corporation
  • Articles of organization for a limited liability company
  • Articles of association or constitution for an association
  • Trust agreement or declaration of trust
If the organization’s name is legally changed by an amendment to these documents, also attach a copy of that amendment to the application.

2. Determine state’s registration requirements

State government websites have useful information for tax-exempt organizations. On these sites, they can find tax info and registration requirements for charities.

3. Get an employer identification number for the new organization

Organizations can apply for an EIN online, by fax or by mail.

An organization must be legally formed before applying for an EIN. Nearly all organizations will see their tax-exempt status terminated if they fail to file a required tax return or notice for three years in a row.

4. Submit your tax-exempt application

Use Form 1023 to submit your tax-exempt application. Certain small organizations can use Form 1023-EZ to submit for tax-exempt status.

Source: The IRS