Tax time Relief: How Donations can help

Article taken from IRS.Gov

Get Ready for Taxes: Donations May Cut Tax Bills

WASHINGTON — The Internal Revenue Service reminds taxpayers looking to maximize their tax savings before the end of the year to consider charitable giving. Many taxpayers may already be planning on doing so for #GivingTuesday on Nov. 28. Giving money or goods to a tax-exempt charity before Dec. 31 can usually be deducted on that year’s federal income tax return. Taxpayers are urged to consider the following before donating:

Only Donations to Eligible Organizations are Tax-Deductible.

The IRS Select Check tool on is a searchable online database that lists most eligible charitable organizations. Churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in this database.

Itemize to Claim Charitable Donations

Charitable deductions are not available to individuals who choose the standard deduction. Only taxpayers who itemize using Form 1040 Schedule A can claim deductions for charitable contributions. Tax preparation software usually alerts taxpayers to the tax savings options available if itemized deductions exceed the standard deduction. The website can help you answer the question, “Should I itemize?

Get Proof of Monetary Donations

A bank record or a written statement from the charity is needed to prove the amount and date of any donation of money. Money donations can include various forms apart from cash such as check, electronic funds transfer, credit card and payroll deduction. Taxpayers using payroll deductions should retain a pay stub, a Form W-2 wage statement or other proof showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

Donating Property

For donations of clothing and other household items the deduction amount is normally limited to the item’s fair market value. Clothing and household items must be in good or better condition to be tax-deductible. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with their tax return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more. It must include, among other things, a description of the items contributed. Special rules apply to cars, boats and other types of property donations. The website has information to help you determine the value of donated property.

Note Any Benefit in Return

Donors who get something in return for their donation may have to reduce their deduction. Benefits can include merchandise, meals, tickets to an event or other goods and services. A donation acknowledgment must state whether the organization provided any goods or services in exchange for the gift along with a description and estimated value of those goods or services.

Older IRA Owners Have a Different Way to Give

IRA owners age 70½ or older can transfer up to $100,000 per year to an eligible charity tax-free. The transfer can count as their required minimum distribution for the year. Funds must be transferred directly by the IRA trustee to the eligible charity. For details, see Publication 590-B.

Good Records

The type of records a taxpayer needs to keep depends on the amount and type of the donation. An additional reporting form is required for many property donations and an appraisal is often required for larger donations of property. Visit for more information.

Additional IRS Resources:

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Exactly who gets a 1099-misc?

The 1099 miscellaneous is one of the most common tax forms. So who gets one?
Typically, this form is issued to independent contractors, janitorial services, third
party accounts and any other worker paid for services who is not on the payroll.
But like many IRS regulations, it’s not quite so simple. Let’s look at some factors
that help determine if a 1099-MISC is needed.
1. The payment is $600 or more for services – not physical products.
The first rule of thumb is that the payment must be at least $600. If it’s less
than that amount, a 1099-MISC is not required and should not be issued.
2. Services performed are for business purposes.
Say you contract with a worker to remodel your office breakroom. The total
comes to $5,000. You would likely issue a 1099-MISC in this case. But let’s say
you contracted that same worker to remodel the kitchen in your home. Do you
need to issue a 1099-MISC? The answer is no because the kitchen remodel was
for personal, not business reasons.
3. You contract with a business that is a C-Corporation or an S-Corporation.
It’s a common belief that businesses don’t need to send out 1099-MISC forms
to corporations. And this is true. Sometimes.
In general, you don’t have to issue 1099-MISC forms to C Corporations and
S Corporations. But there are some exceptions, including:
Tips to Determine Who
Receives a 1099-MISC
• Medical and health care payments
• Payments to an attorney
• Substitute payments in lieu of dividends or tax-exempt interest
You can read about other exceptions, like cash payments for fish (yes, it’s a thing) here.
4. You contract with a business that is an LLC sole proprietorship.
You will need to send out a 1099-MISC form if you’re working with an LLC sole proprietorship.
An easy way to tell? Just look at the W-9 your worker provided. If the W-9
indicates they are an LLC that is taxed as a sole proprietorship, you need to send a
1099. If their LLC is taxed as an S- or a C-Corp you do not (unless an exception applies
as described above).
When in Doubt
If you’re unsure, it’s always best to file a 1099-MISC. There’s no penalty if you file one
but you didn’t need to. On the other hand, not filing one that is required can lead to
hefty penalties.
And here’s a final tip: Always get the W-9 before you issue payments to any vendor who
may be required to get a 1099-MISC. Less-reputable vendors might not be around when
you need their information at tax time.

This article is taken from


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2017 Estimated Tax Payments

Do you owe estimated tax for 2017? Check out the IRS notice and new website below and make your payments before the end of the year!

10 Million Taxpayers Face an Estimated Tax Penalty Each Year; Act Now to Reduce or Avoid it for 2017; New Web Page Can Help

WASHINGTON — The Internal Revenue Service today reminded taxpayers assessed an estimated tax penalty for tax year 2016 that they still have time to take steps to reduce or eliminate the penalty for 2017 and future years.

To help raise awareness about the growing number of estimated tax penalties, the IRS has launched a new “Pay as You Go, So You Don’t Owe” web page. The page has tips and resources designed to help taxpayers, including those involved in the sharing economy, better understand tax withholding, making estimated tax payments and avoiding an unexpected penalty.

Each year, about 10 million taxpayers are assessed the estimated tax penalty. The average penalty was about $130 in 2015, but the IRS has seen the number of taxpayers assessed this penalty increase in recent years. The number jumped about 40 percent from 7.2 million in 2010 to 10 million in 2015.

Most of those affected taxpayers can easily reduce or, in some cases, eliminate the penalty by increasing their withholding or adjusting estimated tax payments for the rest of the year. With a little planning, taxpayers can avoid the penalty altogether.

By law, the estimated tax penalty usually applies when a taxpayer pays too little of their total tax during the year. The penalty is calculated based on the interest rate charged by the IRS on unpaid tax.

How to Avoid the Penalty

For most people, avoiding the penalty means ensuring that at least 90 percent of their total tax liability is paid in during the year, either through income-tax withholding or by making quarterly estimated tax payments. Keep in mind exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers, fishers, casualty and disaster victims, those who recently became disabled, recent retirees, those who base their payments on last year’s tax and those who receive income unevenly during the year. For details, see Form 2210 and its instructions.

Taxpayers may want to consider increasing their tax withholding in 2017, especially if they had a large balance due when they filed their 2016 return earlier this year. Employees can do this by filling out a new Form W-4 and giving it to their employer. Similarly, recipients of pensions and annuities can make this change by filling out Form W-4P and giving it to their payer.

In either case, taxpayers can typically increase their withholding by claiming fewer allowances on their withholding form. If that’s not enough, they can also ask employers or payers to withhold an additional flat dollar amount each pay period. For help determining the right amount to withhold, check out the Withholding Calculator on

Taxpayers who receive Social Security benefits, unemployment compensation and certain other government payments can also choose to have federal tax taken out by filling out Form W-4V and giving it to their payer. But some restrictions apply. See the form and its instructions for details.

For taxpayers whose income is normally not subject to withholding, starting or increasing withholding is not an option. Instead, they can avoid the estimated tax penalty by making quarterly estimated tax payments to the IRS. In general, this includes investment income —such as interest, dividends, rents, royalties and capital gains —alimony and self-employment income. Those involved in the sharing economy may also need to make these payments.

Tips to Make Estimated Tax Payments

Estimated tax payments are normally due on April 15, June 15, Sept. 15 and Jan. 15 of the following year. Any time one of these deadlines falls on a weekend or holiday, taxpayers have until the next business day to make the payment. Thus, the next estimated tax payment for the fourth quarter of 2017 is due Tuesday, Jan. 16, 2018.

The fastest and easiest way to make estimated tax payments is to do so electronically using IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For information on other payment options, visit Taxpayers may also use Form 1040-ES to figure these payments. IRS Publication 505, Tax Withholding and Estimated Tax, is a resource on withholding and estimated payments.

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