Anthony Sykes & Company

           Many plan on making charitable donations this time of year, especially for Giving Tuesday. Before doing so, it is always best to know if the gift is tax-deductible. It is also a good practice to research the organization to make sure it is tax-exempt and get a written acknowledgement of a donation greater than $250. Usually, a gift of cash or property given to a charity can be deducted when itemized on a tax return. However, some donations do not qualify for a tax deduction. For example, a donation carried forward from a prior year, a donation made to a supporting organization, or donations made to most private foundations will not be eligible for a tax deduction. Take time now to plan your gift and understand how it may affect your taxes.

             This is the busiest shopping season of the year, and most of it is being done online. This means that criminals are actively trying to find opportunities to steal your information. They often use it to try and get a fraudulent tax refund. This is our second post about how we can protect ourselves.           Beware of scammers using fake charities . This is a time of year when many want to give to organizations. Criminals know this and try to use it to their advantage. Never let anyone pressure you into donating without doing research first. Make sure the charity is real by confirming its exact name, website, and mailing address. If the name is similar to, but not the same, as a well-known charity, this is often a sign of fraud. Give donations by credit card or check, do not give gift cards or wire money.           Businesses need to learn b...

                 Starting a business is hard work and can be expensive. Some of these costs can be deducted over time and recovered by the business. This can be done over a period of 15 years after the business is active, but it does not apply to every expense.           A qualifying start-up cost must be paid before the business is active. It must also be related to the field the business operates in. It can include advertisements for opening the business, travel costs related to securing suppliers and customers, and fees for consultants and other professional services. Costs related to investigating whether to purchase another business can also be deducted.           Not all costs qualify. Interest, taxes, and costs for experiments do not qualify for deduction. The actual purchase of another business cannot be deducted from federal taxes. The...

     The Internal Revenue Service ( IRS ) is making a special effort to make sure that taxpayers know about a special charity deduction that is available this year. The year of 2020 has affected all of us in different ways. However, because of the unique challenges faced this year, some may feel even more motivated to give to charities. The Coronavirus Aid, Relief and Economic Security ( CARES ) Act gives extra encouragement to do so.      This special tax law allows for a $300 tax deduction without the need to itemize your Tax Return. This special deduction will allow for some extra tax savings while using the standard deduction. To qualify, these donations must be made by cash, check, debit or credit card. Good records must be kept, including having a receipt or acknowledgement letter from the charity to file with your Tax Return. Please check to make sure that the organization you choose is eligible for tax-deductible donations. Make an appointment wit...

     This is normally the time of year to reflect on what has happened during the previous months. There is much to consider on that topic if you choose to do so. For many, this is also a time to make donations, and perhaps use those donations as tax deductions.      The Internal Revenue Service ( IRS ) has changed some of those rules for 2020. This is due to the passage of the Coronavirus Aid, Relief and Economic Security ( CARES ) Act earlier this year. Taxpayers can now deduct charitable contributions even if they do not itemize their deductions. However, they must still go to qualifying organizations that are religious, charitable, educational, scientific, or literary in purpose. They need to meet certain requirements and Taxpayers need to have the right documentation to present to the IRS . Your Qualified Tax Professional can help you make sure that your valued gift goes to the right place.

       People want to help each other. This is the fundamental feeling that criminals want to exploit whenever there is a disaster. The COVID-19 pandemic is no different. Scam artists will set up fake charities, often with names very similar to legitimate ones, to accept money from unwitting Taxpayers telling them it will be a tax write off. The rise of these schemes this year has led Fake Charities to earn a place on the Internal Revenue Service ( IRS ) Dirty Dozen list.      One sign that you might be dealing with a fake charity is if you receive an unexpected text, phone call, or social media message. These links will lead Taxpayers to fake websites designed to trick visitors into giving up their personal information. Some might even claim that they are working with the IRS . If the name of this organization is similar to, but not the same, as one that is nationally known, you should be wary. This is often a clue that they are fake. A true orga...

         The filing deadline for many tax-exempt organizations is coming soon. They normally need to file Informational Returns of the 15 th day of the 5 th month after their accounting period has finished. For those who operate their fiscal year on the calendar year, the time for them to file is May 15 .           This year the Internal Revenue Service ( IRS ) want to make sure that filers know what is and is not required. By law, most parts of these forms must be made available to the public . These organizations are strongly cautioned against using Social Security Numbers or any other personally identifying information on these forms, schedules, or attachments. Doing so will prevent their donors, clients, or benefactors from having their identities compromised.           There are a wide variety of Forms 990 that are used for tax-exempt organizations. Not...

         Disasters, in one way or another, have become all too common. Sadly, when one occurs, there is a group of people who look to profit from it by stealing the money of well-intentioned people who want to help. Therefore, Fake Charities have made the Internal Revenue Service ( IRS ) “ Dirty Dozen ” list for 2019. This is a list of the 12 most common scams that Taxpayer’s will come across during the year. Here are some basic tips to help keep you from falling prey to a scheme like this.           Be suspicious of any charity that has a name like one that is familiar or nationally known. This is a trick used to make people feel that the bogus organization is truly legitimate. Never give personal information , like passwords or Social Security Numbers to those who are soliciting for donations. They don’t need that information! Confirm that they are from an actual charity before providing any Credit/Debit ...

         It has been well documented that the partial shutdown of the Federal Government has placed a great burden on the Federal employees who are not receiving a paycheck. Some of whom are being forced to work without pay, such as the Transportation Safety Administration , United States Coast Guard and Air Traffic Controllers . Many in the IRS will soon be called back to work in order to process Tax Returns without pay as well. However, as this shutdown has now continued for a full month, the ripple effect is now growing.           In the state of California, Non-Profit organizations are being directly impacted by this shutdown. Housing organizations are unable to tell if their applications have been received or approved by the Department of Commerce. This is a great concern because they are directly related to the fires last year in Northern California. The Tax Preparation Assistance programs that Non-Profi...

          After the federal changes made by the Tax Cuts and Jobs Act, many people are looking to see what moves their states will make. Some states have a relatively simple tax system (no state income tax or low property tax), and they want to keep it that way. Other states made their own changes that impacted tax collection in 2018. For example, Kentucky made adjustments that now allow for more taxes to be collected from the activities of non-profits.           Then there are the other states that want to do something but are not sure what. The state of California can fall into this category. The last major change to the state tax code occurred in 1935, and property tax has been limited since 1978 due to voter passed Proposition 13. This means that the majority of California’s income comes from personal income taxes. With its progressive nature, those who make the most, also pay the most. That is also true of b...

     At times, it seems that the only constant in life is change. This can be magnified if we hold onto wrong ideas, or do not recognize the shift to what the future will hold. When the Tax Cuts and Jobs Act was passed, it was a major event in the world of taxation. Now we all need to take time to understand how it will change things.      Along with the 21% corporate tax, the TCJA will now apply the same tax on nonprofits when it comes to employee benefits. Having a nonprofit pay taxes is nothing new . However, this provision looks to affect churches as well, which would be unprecedented. The tax is really directed at benefits the employees receive. What benefits are subject to taxation and who will pay?      That is unclear because the IRS has not yet given any direction on this subject. This could mean that certain groups will have to file tax forms for the first time. The move forward must be tempered with some patience, as the IRS ...

         Most corporations provide a service for a price, and use that revenue to stay in business and keep a profit. This is certainly basic information. They have limited liability protection, meaning that directors and officers are not usually responsible for debts or liabilities of the company. This description applies almost every corporation in the marketplace today. However, there are certain organizations that have a different aim. They may have an educational, charitable, scientific, or religious purpose. In this case, they would state their directive in their Articles of Incorporation . This will define what the corporation is to the state and the IRS. This is simply the first step in creating a Non-Profit and the requirements are different in each state. It is a more complicated process and a Tax Professional will make it easier if they are there from the beginning. But, if this is the area you want to have a corporation in, the work will be well...