5 Ways to Give More to Charities

5 Ways to Give More to Charities

You love giving to others, but sometimes just don’t have the cash to share with your favorite charities. Instead of feeling guilty for skipping out on a donation, why not try these five ways you can still give to non-profits and receive charitable tax deductions. Donate Stock I’m sure you’ve donated food and clothing to a charity before, but did you know that you can also donate stock? Instead of selling appreciated stock and giving the earnings to a charitable organization, avoid losing money on taxes by donating the stock itself. As non-profits don’t have to pay capital gains tax, through gifting an appreciated stock to a charity, the entire value will be preserved while you avoid having to pay extra on taxes! Open a Donor-Advised Fund If you want to give to multiple charities or don’t have a specific amount in mind, opening a Donor-Advised Fund (DAF) is a great way to always have money set aside for your donations and get tax deductions that same year. Simply choose a DAF sponsor, invest in one of their many pre-approved options, and then submit a grant request when you’re ready to donate the money! Like all investments, however, there is risk involved as the value of your DAF can rise or fall with the economy – which is why it’s often smarter to invest in low-risk opportunities if you’re planning to withdraw the money sooner rather than later, or vice versa. Create a Charity Budget As the needs of a non-profit are year-round, treating charitable donations like any other expense and budgeting them out accordingly can not only help...
Are You Taking Advantage of Penalty Abatement?

Are You Taking Advantage of Penalty Abatement?

Here’s some good news for taxpayers with three or more consecutive years of great compliance history: if you had a clean tax record prior to recent penalties, you can apply to have those fees waved through the First-Time Penalty Abatement Program (FTA). Created in 2001 by the IRS, the FTA is a program designed to reward compliant taxpayers by waiving penalties ranging from failure to file and pay, to failure to deposit. And though it’s only applicable for a single tax period or year, anyone with a good compliance history can apply for an FTA. Surprisingly, however, few people actually know of interest abatement, much less take advantage of it. According to the Treasury Inspector General for Tax Administration, only 8% of taxpayers in America applied for and received an FTA in 2012. To combat this, as of this year, the IRS is currently exploring the possibility of automating FTA waivers, but in the meantime, one can now request and receive an FTA through a simple phone call, while the IRS also seeks to promote abatement awareness by inserting informational pamphlets on the back of tax notices. One thing is clear though: tax professionals need to understand the rules surrounding FTAs. For one, clients need to understand that fee abatement only applies to certain failure to file, pay, and deposit penalties, and never estimated tax or return accuracy fees. For another, tax professionals should first seek Reasonable Cause Penalty Abatement whenever applicable (IRS error or late payments due to hardships, for example) before pursuing an FTA, as one can then save First-Time Abatement for another time. To do this,...
The Student Debt Problem (Part 2)

The Student Debt Problem (Part 2)

Earlier this week we brought you the first installment to our two-part series covering the rising issue of student debt in America, where we discovered how school loans became so expensive – an article you can find here. Today, we bring you Part Two, in which we follow the money to see just who profits off of each loan… Where Does the Money Go? For starters, a large majority of each loan goes towards the colleges themselves – funding tuition, dorm costs, etc. But ever since Congress took a step back from student-aid, however, allowing private companies a larger say with less restrictions, the entire educational system has turned into a giant profit wheel. In fact, through higher interest rates, upcharges, and hidden fees, nearly everyone on Wall Street now has a share in the earnings. As a student loan is nearly the only consumer debt that can’t be discharged under bankruptcy, banks now lock in a steady income of interest rates and penalties, while debt collectors can also cash in on commissions earned from overdue payments. Meanwhile, the government, through a policy known as Administrative Offset, can potentially withhold up to 15% in federal payments to students behind on their debts (including income such as tax refunds, Social Security, and disability checks), in addition to profiting off of the interest rates of its own government-held loans. According to the Government Accountability Office, these federal loans could bring the government up to $66 billion in income, just from those issued between a five-year period. Sallie Mae itself created its own off-branch company called Navient, designed to only facilitate private...
The Student Debt Problem (Part 1)

The Student Debt Problem (Part 1)

Student debt has now become a serious issue in the United States. It’s a common theme: young people attending a 4-year college in the hopes of qualifying for a better job, only to come out with a piece of paper, a job that’s not as high-paying as they thought, and a mountain of debt. Today, nearly everyone knows, or is someone struggling to overcome the massive weight of student loans. According to the January 2018 Reader’s Digest written by James B. Steele and Lance Williams, the average bill totals at $321,731, while nationwide, nearly 44 million people have school loans – the approximate amount of student debt owed in the U.S. coming to a round $1.4 trillion. Which begs the question: how did this happen, and where exactly does all that money go? In this two-part series, we’ll answer both – starting with the “how”. How Student Debt Became So High It started out innocently – Congress created the Student Loan Marketing Association (“Sallie Mae”) in 1972, with the purpose of buying and federally backing school bank loans to help make higher education possible for students. When Sallie Mae went private in 1996, however, the door was opened for the company to make a serious profit off of private loans with higher interest rates and less restrictions, on top of continuing to provide federal ones. This resulted in a massive marketing strategy to promote Sallie Mae as the preferred loan provider to colleges nationwide, as well as placing their own employees as loan advisers inside universities and call-centers. Meanwhile, with less money going back to state governments, many were...
2017 “Dirty Dozen”:  A Tax Scam Report from the IRS

2017 “Dirty Dozen”: A Tax Scam Report from the IRS

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Be careful to avoid the following 12 most common schemes: Offshore Tax Avoidance — Avoiding taxes by hiding money or assets in unreported offshore accounts. Frivolous Tax Arguments — The IRS warned taxpayers against using frivolous tax arguments to avoid paying taxes. romoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims even though they have been repeatedly thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000. Abusive Tax Shelters — For the third consecutive year, the IRS places abusive micro-captive insurance tax shelters on the “Dirty Dozen” list. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. Falsifying Income Scam — The IRS warned taxpayers to avoid schemes to erroneously claim tax credits. Falsely Padding Deductions on Returns — Avoid the temptation to falsely inflate deductions or expenses on tax returns, the IRS warned. Doing so may result in paying less than is...
Why Mixing Business and Personal Funds is Never a Good Idea

Why Mixing Business and Personal Funds is Never a Good Idea

As human beings, we like making things easy – which is why most people look at having separate accounts for their business and personal funds as a bad idea. “Two accounts?” we think to ourselves. “Double the bank fees? Twice the work for account reconciliation? No thanks! I’ll just do the smart thing and combine them – after all, it doesn’t hurt anyone…” Wrong. Mixing business and personal funds can hurt you quite a bit in the long run. Here are three reasons why this common misconception is never a good idea. Bookkeeping Will Take Twice as Long You may think that you’re saving time by combining your funds into one account, but once that account needs to be reconciled, you’ll have to enter all personal transactions besides those related to your business. Finding certain transactions will become more difficult as you’ll have to sift through twice as many non-related items while keeping everything organized will become much harder. Save yourself the time and frustration by opening up a separate account for your business funds. Business and Personal Records Can Easily Become Confused with One Another Whether you’re trying to account for your business income statement or your personal expense sheet, the numbers will almost never add up correctly when entered into accounting software. Unless extensive work is put in to correct the issue, business records will show your personal deposits as extra income, while your personal expenses will be largely overstated due to business charges. Business reports will inadvertently display false numbers, while personal records will show large discrepancies in charges and payments. Prevent a small accounting error from...

Pin It on Pinterest