What Qualifies As A Donation On Your Taxes

The IRS defines a charitable contribution as “a donation or gift to, or for the use of, a qualified organization.” You must abide by certain rules to claim charitable donations on your taxes legitimately. Do you know the tips for handling donations on your taxes?

 

You must abide by certain rules to claim charitable donations on your taxes legitimately.
You must abide by certain rules to claim charitable donations on your taxes legitimately.

 

Charitable Contributions what Are They?

Donations include property such as vehicles, household items, clothing, land and cash contributions.  You can only deduct the fair market value (FMV) of any property you donate.

How Do You Determine The Fair Market Value?

Fair market value includes donations of noncash property of items like clothes, household items, land and cars additionally stocks may qualify. The FMV comes down to the price the item you are donating and how much it would sell for on the open market.

Do Your Expenses Qualify as a Charitable Tax Deductions?

You can claim a tax deduction for expenses you acquire:

  • To cover a live-in student who is sponsored by a qualified organization.
  • Out of pocket while serving as a volunteer for a qualified organization.

For questions of what counts as a deductible charitable contribution, consult Donohoo Accounting Services.

 

For questions of what counts as a deductible charitable contribution, consult Donohoo Accounting Services.
For questions of what counts as a deductible charitable contribution, consult Donohoo Accounting Services.

 

Which Organizations Qualify to Receive Charitable Contributions?

The government allows the following types of establishments qualified to take tax-deductible donations:

  • Religious (such as churches, mosques, synagogues and temples)
  • Literary
  • Educational (such as nonprofit schools)
  • Charitable (such as American Red Cross, Boys and Girls Club of America, Goodwill, Salvation Army and United Way)
  • Those working to prevent cruelty to children or animals
  • Scientific
  • Federal, state and local governments (for contributions intended for public purposes)

These Charitable Contributions Are Not Tax Deductible?

As a general rule, donations to individuals, political organizations and candidates for public office are not tax deductible. The same goes for gifts of money or property given to:

  • Homeowners associations
  • Sports clubs
  • Chambers of commerce
  • Civic leagues
  • Social clubs
  • Labor unions
  • Civic leagues

How Can I Be Sure I’m Donating to a Tax-Exempt Organization?

The easiest way to confirm that you are donating to a tax-exempt organization is to ask the organization directly for proof of their tax-exempt status. You also can search for charities using the Exempt Organizations Select Check tool or confirm tax-exempt status by calling the IRS at (877) 829-5500.

Cash Donations Receipts To Keep

If you donate by check, cash or some other monetary gift, you must provide written communication such as a bank record, payroll deduction records or written acknowledgement from the tax-exempt organization with your tax return. This written proof must include:

  • The name of the organization.
  • The date you made the contribution.
  • The amount of your contribution.

 

The amount of your contribution.
The amount of your contribution.

 

If you still have questions about what is a taxable donation or what constitutes a taxable donation please contact Donohoo Accounting at 513 528 3982.  We specialize in helping small businesses with all you taxable needs.

What Are The Basics Of Accounting Methods

What are accounting methods? Accounting methods help businesses keep their cash records and assist in preparing money reports by utilizing two fundamental methods of record-keeping for cash.  These two methods are cash-basis and accrual basis accounting.  These methods both have their own distinctive advantages of keeping corporate record keeping which help keep track of money coming an and out of the business. Donohoo Accounting knows what are the two types of accounting methods and how to utilize the for your business.

 

Accounting methods help businesses keep their cash records and assist in preparing money reports by utilizing two fundamental methods of record-keeping for cash.
Accounting methods help businesses keep their cash records and assist in preparing money reports by utilizing two fundamental methods of record-keeping for cash.

 

CASH-BASIS ACCOUNTING

What is cash-basis accounting? Corporations recording expenses in financial accounts when the cash is laid out, and they book revenue when they actually hold the cash in their hot little hands or, more likely, in a bank account. For example, if a plumber completed a project on December 30, 2018, but doesn’t get paid for it until the owner inspects it on January 10, 2019, the plumber reports those cash earnings on her 2018 tax report. In cash-basis accounting, cash earnings include checks, credit-card receipts, or any other form of revenue from customers.

 

Corporations recording expenses in financial accounts when the cash is laid out, and they book revenue when they actually hold the cash in their hot little hands or, more likely, in a bank account.
Corporations recording expenses in financial accounts when the cash is laid out, and they book revenue when they actually hold the cash in their hot little hands or, more likely, in a bank account.

 

ACCRUAL ACCOUNTING

Does your company use accrual accounting? This method is when you record revenue when the actual business is completed ex. (is when the completed amount of work that was stated in a contract agreement between the company and its client), not when it obtains the cash. The company records income when it produces it, even if the customer hasn’t paid yet. For example, a plumbing contractor who uses accrual accounting records the revenue earned when the job is completed, even if the client hasn’t paid the final invoice yet. Expenditures are handled in the same way.

 

The company records income when it produces it, even if the customer hasn’t paid yet.
The company records income when it produces it, even if the customer hasn’t paid yet.

 

BASIC ACCOUNTING TERMS

  • Equity: The net worth of your company. Also called owner’s equity or capital. Equity comes from investment in the business by the owners, plus accumulated net profits of the business that have not been paid out to the owners. It essentially represents amounts owed to the owners. Equity accounts are balance sheet accounts.

 

  • Assets: Things of value held by your business. Assets are balance sheet accounts. Examples of assets are cash, accounts receivable and furniture and fixtures.

 

  • Liabilities: What your business owes creditors. Liabilities are balance sheet accounts. Examples are accounts payable, payroll taxes payable and loans payable.

 

  • Debits: At least one component of every accounting transaction is a debit amount. Debits increase assets and decrease liabilities and equity.

 

 

While all these terms may seem a foreign language or a little overwhelming they can keep your business finances in order and make tax time a lot easier when it comes time to file.  Making the everyday accounting run smoothly can be done with Donohoo Accounting Services. Call us today for your free evaluation and let us take the stress out of your day-to-day money functions.

Need Help Managing Your Money? Try These Top 10 Budgeting Apps

It’s said that no one likes making a budget, they only like having a budget. If that’s true, then there are at least 10 apps to help make it much easier for you to not only have a budget but also to follow it. Although each of these 10 budgeting apps features slightly different characteristics, all of them have two important goals:  1) To help you understand where your money goes and 2) To keep you from spending more than you have. With these goals in mind, let’s take a closer look at each of these top 10 budgeting apps that just may help you stretch your dollars.

 

  1. Mint – Nearly all reviews of budgeting apps include Mint on their lists for one primary reason: It tracks everything when it comes to your money. Bill alerts, account balances, investments, loans, bank fees, credit cards, even cash transactions are all accounted for in Mint. Based on these and other factors, Mint configures your budget and instantly calculates your net worth.

 

Need Help Managing Your Money? Try These Top 10 Budgeting Apps
Nearly all reviews of budgeting apps include Mint on their lists for one primary reason: It tracks everything when it comes to your money.

 

  1. YNAB –You Need a Budget,” thus the acronym. Rule #1 in YNAB is to “give every dollar a job.” Assigning your income dollars to expenses shows how much you have left for discretionary spending, saving, or getting out of debt.

 

  1. Wally – Wally is more than a budgeting tool. It’s a personal finance app. Wally performs all the budgeting functions while also helping you keep track of – and stay abreast of – your progress toward your financial goals.

 

Need Help Managing Your Money? Try These Top 10 Budgeting Apps
Wally is more than a budgeting tool. It’s a personal finance app.

 

  1. Simple – Just as its name implies, easy-to-use Simple tracks expenses through your bank accounts. You can set and track savings goals as well as instantly check your “safe-to-spend” amount, which keeps you from overspending. Note: Just so you don’t confuse other apps for this one, Simple is called “Simple – Better Banking” in your favorite app store.

 

  1. Pocketguard – Instantly providing you with the “big picture” of your finances, Pocketguard also uses a pie chart to help you keep aware of spending against your budget while reminding you of your “in my pocket” balance – the amount you have to spend minus your bills. Pocketguard helps you set and track savings goals, as well.

 

Need Help Managing Your Money? Try These Top 10 Budgeting Apps
Pocketguard helps you set and track savings goals, as well.

 

  1. GoodBudget – Remember when budgeting meant labeling envelopes and filling them with cash to pay your bills? GoodBudget uses the same idea but in a virtual budget program. You can track your “envelope” balances on your way to reaching your most important financial goals.

 

  1. Mvelopes – Using the same concept as GoodBudget regarding virtual envelopes, Mvelopes adds additional levels of service (for a fee) up to and including having the help of a personal finance trainer. Choose from three levels of subscription budgeting service: Basic, Plus, or Complete.

 

  1. Albert – The Albert personal finance app – and Albert Genius, an additional service – carry out similar savings, spending, and tracking functions as other budgeting apps but with the added twist of offering a team of financial experts whom you can text with specific questions about your personal finances and spending.

 

  1. Trim – If your focus is mostly looking for ways to save money, then Trim is the app for you. Connect your accounts, and Trim will analyze your spending to find money-saving opportunities for you. Additionally, Trim offers automated tips to lower your monthly expenses based on your transactions.

 

Need Help Managing Your Money? Try These Top 10 Budgeting Apps
Trim offers automated tips to lower your monthly expenses based on your transactions.

 

  1. Everydollar – By simplifying the budgeting process, Everydollar can develop your personalized budget in 10 minutes or less, based on your account and expense input. Charitable giving and emergency fund savings are included as part of your overall plan.

 

Because handling money – and money matters – go beyond having a budget, Donohoo Accounting can help you. We are a professional accounting services provider, dedicated to helping our clients overcome the challenges and burdens that individuals and small businesses face. Call us today at 513-528-3982 for a free consultation.

 

4 Actionable Tips for Using Your Tax Refund This Year

Even though getting your tax refund can feel like hitting a mini lottery, it’s important to remember that this payment is your money. As a result, the last thing you want is to let it flow out of your bank account just as quickly as it arrives. If you’ve had that experience in the past, the good news is you can do things differently this year. To help you make the most of every dollar that you receive, here are 4 actionable tips for using your tax refund this year.

  1. Make Payments Towards Debt

People from all walks of life struggle with managing debt. What often starts off as a small amount can spiral into a snowball that just keeps rolling in the wrong direction. What makes debt so problematic is that you’re not just dealing with the initial amount. Instead, interest is what really gets people in bad situations.

Because debt can choke someone’s personal finances, using your tax refund to pay off some or all of your debt is an amazing choice. If you’re trying to decide the specific debt to pay towards, the one with the highest interest rate is almost always the best choice.

  1. Prepare for An Emergency

Whether you have been able to stay out of debt or used previous tax refunds to pay it off, anyone who doesn’t have this burden can intelligently use their refund in a number of ways. A great option is to build up your personal or family emergency fund. Having a meaningful amount of money that’s easily accessible but off limits except for an emergency can give you a lot of peace of mind.

  1. Improve Your Home

Let’s say you’re already debt-free and have a comfortable emergency fund built up. One option to consider for your refund is improving your home. As long as you do your research and choose a project with a strong ROI, you’ll be adding to the long-term value of what is likely your largest asset.

  1. Other Investments

The other really good option that’s available for leveraging your tax refund is investing the money. Just keep in mind that even though highly speculative investments like cryptocurrency can seem enticing, they come with an incredible amount of downside risk. Investing your money in a more conservative option and letting it grow for the foreseeable future will likely yield the best return.

If you want to get your tax return filed so that you can get your refund and put it to good use, Donohoo Accounting Services can take of this process for you. All you need to do is call us at (513) 528-3982 to set up an appointment.