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Two odd types of tax exempt organizations

We all know that tax exempt organizations are a tax exempt nonprofit organization in the United States. Two odd organizations would include:

 

Social clubs. Now to be exempted, a social club must have certain requirements. The club must naturally be organized for exempt purposes. All of its activities must exceed exempt purposes. The club has the minimal income from nontraditional sources like for example from investments or activities that, if done with members, would further this club’s exempt purposes. Next the club must give an opportunity for personal contact which is among members, and the membership needs to be limited. The club needs to be supported by it’s members fees, dues, and their assessments. Although the net earnings of the organizations may not insure to the benefit of the people having a not only personal but also a private interest in its activities. The club’s governing instrument does not have a provision that will provide for any discrimination against a person based on their race, color, or religion. Your club may not even hold itself out as providing goods and services to the public.

 

The second would be the Fraternal Societies to be exempted, a certain fraternal beneficiary society or an association must meet these requirements. First, it must have the known fraternal purpose. This is why it is known as a fraternal society. The organization would be considered to have a fraternal purpose if the membership would be based on a common tie or pursuing a common object. The organization must also have a reasonable program related to fraternal activities. It has to be able to operate under the lodge system. This is mainly for the benefit of the members of the given fraternal organization itself which is operating under the lodge system. The organization must be able to provide for the payment of life, any freak accident, sickness, or other things which benefit the members of such society, or association and dependents. The organization which can provide benefits to some, but not exactly all of the members can qualify for exemption just as long as almost all or at least most of the members are eligible for benefits.

 

                    

images from: taxrates and readyratios

Things to know about Tax Exempt Organizations

Tax Exempt Organizations have certain Exemption rulings and Adverse Determination Letters. When the IRS is able to determine that an organization may qualify as for a tax exemption status, the technical division of the IRS Tax exempt Organization will issue you a letter. This letter would state that the organization has been able to qualify for a tax exemption status and will be able to accept tax deductible donations. The IRS will be able to determine that an organization will not qualify for any tax exempt status, instead a very determinate and adverse letter will be sent to the organization which will explain why the request for the exemption was denied in the first place. The letter will also provide instructions on how you must appeal to the adverse determination. The IRS usually posts letters over 2000 online to present to those that wish to know more. Now for tax returns, exceptions would include the usual religious organizations and charities as well even if they are small. For charities, the revenue must be around less than $25,000 annually. Each organization may post the form on their website. Churches are automatically considered a tax exempted organization. They are not required to have anything filed or registered with the IRS, although some churches file anyway. Qualified tax exempt organizations will be listed by the state. This is what makes it easy for those to check on a certain organizations status. Usually, there is a delay of up to a month before the newest or most recent organizations get onto the list. If you call the IRS office, you will be able to check you desired organizations status. We have to keep in mind though that these tax exemptions may also refer to a personal allowance, income, or even your property, but for organizations like charities and property & income taxes, they receive exemption to the general rule rather than exemption to as the mere absence of taxation. In other words you will not be excluded from taxes but exempted, these are two different things. It is also a possibility that some jurisdictions may grant tax exemptions to certain organizations that may not exactly be the particular type of category, or not mentioned in any of the categories above.

exempt

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Kids Wish Network

If I would choose to donate to a qualified organization of my choice, I would always choose charities which are built to help children. And I have found one of the organizations . It is founded in 1997 and they are called the Kids Wish Network they are an international charitable organization that dedicates their time to infuse hope, create happy memoirs, and improve the quality of life for children who have experienced life-altering circumstances.

Kids Wish Network helps children and their families through different programs. Kids Wish Network was founded in 1997 by Shelley and Mark Breiner, and also Shelley’s mother Barbara Askin. They built the foundation to fulfill the wishes of the children that suffers a life threatening condition. At the time when Shelley’s father’s fight with cancer, they regularly encountered and met young cancer patients and their families, and they had witnessed how the young patients constantly fight for their lives because of the life threatening disease.

After her father’s death, Shelley and Mark sold their family business and started the creation of Kids Wish Network to help and make a difference in the lives of children in need.Since its commencement in 1997, Kids Wish Network has been lovingly inclined to improving the well-being and quality of life for sick children nationwide. Every year, thousands of children across the United States that benefit from the organizations various programs.

Following the organization’s mission they continue to believe in celebrating life and encouraging the children and their families to remain faithful annd hopeful. They considered the generosity of individuals, corporations and foundations across the country in providing aid and support to fulfill the mission of the organization. Most of the donors want know how they can contribute to be used to benefit their mission.

Through the help of various foundation such as Wal-Mart Foundation, Kids Wish Network founded its Guardian Angel Fund where All donations are directed to this special security fund that directly support program services, making 100% of donors contribution benefit the children thus organization serve.

The organization’s professional fundraisers have three major objective:
1.) They seek to find children in need of our wish granting services.
2.) They strive to inform people of Kids Wish Network and our important services.
3.) They are determined to acquire new donors and secure the funds needed to meet our mission.
The organization’s mission must be one of the most genuinely caring cause and helping children in need of major support really touches a lot of people’s heart making their foundation a successful one among other organizations that claims the same cause.They seek to find children in need of our wish granting services. They strive to inform people of Kids Wish Network and our important services. They are challenged to acquire new donors and secure the funds needed to meet our mission.

Images from examiner and laxbuzz.

Give Kids the World Village


Each year there are thousands of children around the world that has been diagnosed with life threatening illnesses. A lot of wish granting organizations are devoted to make these children and their families to experience a better life within their battle of their sickness. There is a non profit organization in Central Florida which is a  70-acre, non-profit resort that was built to create magical and extraordinary memories for children with life- threatening illnesses and their families. Give Kids The World Village gives free accommodations at its whimsical resort, from donated attractions tickets, meals and more for a week-long, cost-free fantasy vacation.

Made possible by the help of many generous individuals and companies and partnering wish-granting foundation that enabled for Give Kids The World to welcome more than 130,000 families internationally. They are an independent non-profit organization that made partnership with more than 250 referring wish organizations to grant a child’s wish to Central Florida. But they function independently from these organizations and our corporate partners. All Give Kids The World employees are based at the Village in Kissimmee, Florida.

There is only one Give Kids The World Village in the world. Give Kids The World is a registered non-profit in all states where required. There are approximately 27,000 children that are diagnosed with a life-threatening sickness. More than half of those children would want to visit a Central Florida theme park and for those wish granting organization that support these children, making their wishes come true is just a phone call away.Give Kids The World has welcomed more than 130,000 children to dat and their families to the Village for their wish of their dream getaway.
Give Kids The World made all their wishes possible with the help of the great and generous individuals, companies and corporation, as well as wish granting foundations who are all devoted in helping these children. However, the organization also must find a way to pay cash expenses for the operation of the Give Kids The World Village. These foundation’s expenses are over of $12 million yearly.

They are able to finance this expense by undergoing corporate promotions, fundraising events and private donations but Give Kids The World does not ask contributions via phone call or by door to door.
The organization’s mission is to exist and help out children and their families to be able to experience a Central Florida attraction with accommodation, meals, ticket for them parks and many more.

Images from wishuponthenorthstar and debbieandthetribe.

Maximum Amount for filing tax deductions

One of the most effective way to deduct taxes is by donating to qualified charitable organizations. But what is the maximum amount you can donate by cash? And if that amount is the total or is it that amount for the whole year or the total amount for each charity you will donate? In filing for tax deductions,you have to make sure that you are well educated about the do’s and dont’s, since the IRS are very strict and meticulous about the documents being submitted by tax payers.

You have to keep in mind that the total donations to charities by giving cash and non  cash could be equal of the 50 percent of your adjusted gross income. Any donations that exceeds that cannot be deducted in the same year you donate. But anything that you have donated in excess of your adjusted gross income can be filed for next year’s tax filing year. In fact, you can “carry forward” excess contributions for up to four more years beyond the year you donated.

You have to remember that your adjusted gross income is not the same as your total income. It is defined as your income minus those deductions that you do not have to itemize, it is also the amount you enter in lines 37/38 on Form 1040.

However, there is a different limit or threshold that is applicable to stock donations or other properties with long-term gains donations. If this is the case, you can only deduct the fair market value of those shares and property up to 30 percent of your Adjusted Gross Income. But always remember that it is always important to keep track of all the transactions made and donations made and all the documents for proof that is in association with the gifts made to charity.

Some says and cautions that people often overstate the fair market value of donations to Goodwill which is one of the charitable organizations whom do not provide receipts or documentation as proof of your charity donations.. The Salvation Army provides a donation value guide which provides a 101 information that references the price for each item.

Keep in mind that if a taxpayer file a tax deduction of more than $500 for all donated property, the taxpayer must fill out and attach IRS Form 8283, Noncash Charitable Contributions, to the form 1040.”

Be reminded that in terms of cash donations, if you write a check for more than $250 to any one organization, you’ll need to keep a receipt that would serve as evidence of the check in your records in case of an IRS audit.

 

 

Images from bankingsense and asianfortunenews.

Sales Tax Holidays

 

Sales Tax Holidays

Sales Tax Holidays

Back-to-School

Back-to-School

A lot of organizations are exempted from tax. It can be organizations, properties, people or other things under special categories. Tax exemption does not necessarily mean you are not liable to pay tax completely, some may mean just a tax reduction payable, some may mean a particular item that are not taxable, or some may refer to allowances. Basically, it boils down to either removal or reduction of taxes in a one word definition.

This is the common knowledge of tax exemption; however, little did we know that there are other tax exemptions aside from these charitable organizations or religious constructions, which are sales tax holidays. Sales tax holidays are a day of purchasing wherein certain stores or countries sell their items tax free. This is a huge benefit for the buyers since a big percentage of the price had been cut off because of the state sales tax, though some still may pay the local taxes. Majority of this sales are happening when school is fast approaching or when a hurricane or other calamities are about to hit and people need to stay home or buy supplies to be kept safe when the following days will be for recovery. Also, assuming that when calamities struck, a lot of damages will take place and stores, supermarkets and other essential stores may be closed, it serves as a precaution and anti-starvation, hence it is always better to prepare beforehand.

In this year alone, there are a total of 17 to 18 establishments that are part of this sales tax holiday in the United States alone. Having said that sales tax holidays come in preparation for the calamities, looking further down the details, Alabama offers hurricane preparedness generators worth just $1000, in Florida it is worth %750, in Virginia it is also offered at a $1000, this is in case brownouts arise. Now in line with the flood caused by the hurricanes, there is hurricane preparedness equipment for $20 to $40, for Virginia it is $60. And for the outcome caused by these hurricanes, there are clothing and footwear that are also tax free for states like Mississippi, Maryland, Missouri, Alabama, Arkansas, etc. That is for the hurricane, and for the back to school promos, there are school supplies, packages, worth a $100 in Tennessee and Texas, $20 for Virginia, $100 for Georgia and Florida as well. These are just some of the Sales tax holidays that was mentioned and there are a lot others aside from these.

Image By: northescambia.com/     hamptonroadschamber.com

Evolution of Charity

History of Giving

History of Giving

Frederick H. Goff

Frederick H. Goff

Going back in time, 2500 BCE, even ancient Hebrews use mandatory tax or ‘tithe’ to benefit the less fortunate. And after that, in 500 BCE, the word philanthropy then came to the world, it appeared in the drama “Prometheus Bound” produced by Aeschylus, the word Phil meaning love and the word Anthro meaning man, which is the essence of charity, loving man. And on 387 BCE, Plato’s academy was established. They were a group of people who volunteered to work for the public good in their own terms. In 28 BCE, Augustus, the very first Roman emperor, gave a public aid to 200,000 people in Rome.

Now moving to the CE, in 1180 CE, a book was published by Moses Maimonides entitled “mishneh Torah” and included are the eight levels of charity. In 1601 CE, the word charitable had categories enacted by the Parliament, and the deeds that fall upon this Charitable Uses Act of 1601 are the things that will be considered as charitable. In 1643 CE, charity came to America and a fundraising drive happened which was organized by the Harvard University, being able to produce 500 pounds. And in 1972 CE, It has spread to Latin America where the Sisters of Charity provided social assistance to the needy. In 1835 CE, “Democracy in America” was published by Alexis de Tocqueville highlighting the spirit of America to be a source of its strength, that loving mankind will make the country stronger.

Soon after that, 1913 came and here is where charity and tax intersected roads. A Revenue Act was passed this year exempting the charitable organizations from paying taxes, it was the first ever that initiated, removing the charitable institutions to pay the government. A year after that, the world’s first ever community was established in Cleveland, Ohio, named The Cleveland foundation with founder Frederick H. Goff. In 1931, the first donor-advised fund was established in Winston-Salem, N.C. And in 1935, the corporations already have a touch of it, because corporations are already allowed to take charitable institutions or make one. And from then on until the present day, donations and helpers are still being encouraged to give their wealth to charities and helping organizations. Just in 2013, they are already deducting the taxes of the payers who donated to accredited charities, which is the same as the government actually giving back to charity as well, just not directly.

Giving has always been a dear thing to do. It feels good helping people and giving back on what the world and God has given you. It is a good training to practice and just like the saying, “give and it will come 10 folds back”.

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Gift-Giving Taxes

Plan on giving anyone something expensive? If you are, make sure it doesn’t go the amount that it’s limited to for this year! If you’re giving someone a gift that’s worth over this year’s gift exclusion, you’d better be prepared to pay taxes.

Here’s $14,000!

A “gift” is anything that you directly or indirectly give someone, in exchange for nothing. The rates, as well as regulations that have to do with taxes change every now and then.

For 2014

There are two rates when it comes to how much you can give. Currently, per individual, you can give up to $14,000 in a year, tax-free. Couples can give gifts worth double than that to whomever they like, as the rates still depend on the individual. Earning gifts from other people plays a separate role, and does not affect how much you are able to give or receive.

In case you give over the annual limit of $14,000, as long as you don’t go over your lifetime estate basic exclusion of $5.34M, you still may not have to file taxes.

They’re Still Gifts

There are other ways to avoid your gifts getting taxed, as there are means that have been lawfully exempted. Paying for someone’s education or medical bills, for instance, is not covered. Others include giving gifts to your spouse, no matter what amount it is. However, you may be taxed if your spouse is not a U.S. Citizen.

Other gifts that aren’t taxed are charitable donations, and political contributions.

Avoiding Inheritance/Estate Taxes?

The point of giving gifts is to transfer the ownership of an item to someone else. Usually, people who practice giving these “gifts” do it to avoid inheritance and/or estate taxes in the future. If you own a considerable amount of money and want to give it to your children as inheritance but want to avoid paying inheritance/estate taxes, you may opt to max out your lifetime estate basic exclusion by giving/diving among them your annual limit of $14,000.

Paying the maximum amount as a gift

Be careful, however, because if you plan to give a gift to a generation two times below you and 37 years younger than you, the generation skipping transfer tax may apply.

Best to Plan

Gift-giving is a great way to slowly transfer inheritance without having to pay necessary taxes. It’s a loophole in the system that you may use, and can be maximized if you plan in advance how much you should give and to whom, so that your heirs can use the most out of that money.

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Tithes and Church Donations for Tax Deductions

image Like any other charities, most churches are non-profit institutions where you can donate money or non-cash items to get tax deductions from. And like any other charitable contributions there set rules and regulations you need to follow in filing your tax breaks from a church tithing or donations. Donating to your church serves as a good way of supporting your beliefs and lessening your tax bill while doing so. You can just simply call your church and ask if they are listed as qualified organizations where they can be eligible for the tax deduction. Same as the other charitable contributions if you make a cash donation to your church, those donations are tax deductible where you will receive a tax credit equivalent to the donation amount you made. Non-monetary gifts are also considered as tax deductible item; as long as you get the fair market value of the items you donate and keep a good record for your tax submission. Identical to other non-monetary goods donation to other charities, it is best to keep a good record of the lists of your non-cash donations since IRS requires this list when tax season arrives. You church also needs to provide you with the list of items they have received from you to support the list that you have. For cash contributions to your church, you can always ask annual receipt from your church to use in filing for your taxes. But it is best to get your receipt every time you give your donations for you to keep for tax filing purposes. For tithe payers who usually pay 10% of their income to the church, these are also tax break eligible, but the value or nature of the tithe given to the church doesn’t determine whether this is the amount you can deduct. If you didn’t get or receive personal benefit in giving tithes you may deduct the amount of the tithe you have given to your taxes. But if you do receive benefit or entertainment from the church then you have to reduce the amount of the benefit or service given to you from the amount of the tithe you provided. Just like other charitable contributions to other nonprofit institutions, you must now fill out the Schedule A form and attach it to your completed Form 1040 and other tax forms needed when tax season came. It is very important to be accurate and punctual whenever you submit these documents to avoid tax penalties. image Images from marketwatch and tax.answers.

Donate Books forTax Deductions ( In the US)

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Do you have a lot of books that you don’t use anymore? Books you don’t know where it came from? Or Books you bought out of nothing but don’t read them anyway? You wanted to fix the clutter but you don’t know where to place them yet you don’t want to throw them away? Well, the best thing you can do is to donate your unused books. Give them to organizations you know who need them and organizations that are qualified for you to get a tax deduction credit from.

Books that you donate for the following Qualified Organizations are eligible for tax deductions:

Donated books to the Better World books- They sell the books you donate through various online stores and they aid funding towards charitable organizations that supports public libraries such as the Association of Library Trustees, Advocates, Friends and Foundations. If you go to their website, there are lists of books that are easy to sell and hard to sell, so you would have an idea on which books to donate.

Donation to Books for Africa can also be tax deductible since they are a nonprofit organization that sends books to students in Africa as an aid in their studies.  Most of the time the foundation prefers reference or textbooks for learning but fiction and non-fiction books can also be donated. If you go their website it is also indicated that they do accept monetary contributions as well to help freight costs of these books to Africa.

Books donated to inmates through Books for Prisoners and Books Through Bars are tax deductible as well, Especially if you donated paperbacks (hard bounds aren’t allowed in prison) :  Dictionaries, Spanish storybooks, study guides for different types of jobs and hobbies, college textbooks, history books, drug and alcohol recovery books, and spiritual books or bible.

Another qualified organization to donate books to is the Book for Soldier where they send $30 million in care packages to help US troops. On their website you can sign up as a volunteer and view the book request of the soldiers. You can also give monetary gift as they also need funds for web hosting, postage and other stuff to accomplish their mission.

These institutions above are just some of the qualified organizations I see that needs much attention than the others. But you can also donate your books to Goodwill, Local Thrift Store, as long as they are nonprofit organization and registered through IRS, also you can donate through the Salvation Army, to your local Libraries and other non-profit institutions. It is imperative to remember though, before you donate your books, check the policies for donating books and keep a record and list of the books you have or will donate with its Fair Market Value.

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