Good afternoon everyone, today we’re going to talk about donating to charitable organizations. I know what you’re thinking, “How is this going to help me financially?” So there is a benefit to donating to a charitable organization. There are a few ways that this may help you:
How much can I deduct?
- Your total charitable deduction cannot exceed 50% of your adjusted gross income (AGI)
- You can deduct the actual cost of gas and oil or $0.14/mile if you drove to do volunteer work, and you can even add parking and tolls to this amount. (This deduction has a limit of $249, unless you get a statement proving that you made a contribution of $250 or more.)
- If donating capital assets, such as property or securities, you have the benefit of not paying for the capital gains tax on those and taking the whole donation amount as a deduction. This is as long as you don’t exceed your AGI.
- There are some charitable contributions that limits your deduction to 30% of your AGI, rather than 50%. (veterans’ organizations, non-profit cemeteries, fraternal societies, and certain private foundations.)
*Note: If you donate an amount, and the organization provides a benefit in return (i.e. Food, Entertainment, Merchandise, Etc.), then you can only deduct the difference between the donated amount and the cost of the benefit.
What Organizations Qualify for this to apply?
- Churches, synagogues, mosques, temples, etc.
- Boy Scouts, Girl Scouts, Salvation Army, Red Cross, Goodwill, etc.
- Non-profit hospitals, or any organizations, trying to find a cure/help people with arthritis, cancer, cerebral palsy, heart disease, diabetes, etc.
- Most non-profit educational organizations, like colleges, as long as your contributions are taking place of tuition or enrollment fees.
- Veterans’ groups
- Federal, state, and local governments, as long as the contributions are for public purposes only.
- Political contributions do not qualify for a deduction.
Focus points: Donating to charity is a benefit towards both you and the charitable organization. This being said, it is important that you keep a record of these donations. If your gifts’ value is $250 or more, you will also need to have a statement from the organization with proof of the donation and whether or not this organization provided any goods or services in return for your donation (if they did, they need to give a description of this good/service along with an estimate on its value). Lastly, keep in mind that there is a limit on your deductions of 50% your AGI.
If you are a business owner looking to increase their contributions, consider donating to a charitable organization. “Generosity can not only have moral benefits but also have financial benefits” This could be very beneficial. Here at Delerme CPA, we strive to help our clients see benefits like this one and help them get the most out of their hard work. Give us a call if you guys are having any concerns or if you have any questions. Have a nice day.
Delerme CPA has created a unique concept designed around making the process for helping international companies to smoothly and quickly establish a United States entity for doing business in Georgia.
With this program, our team of experts is available to assist with business aspects of this transition. And for the legal aspects, we will provide you with recommendations on the best immigration law firm for your particular circumstances.
The Delerme CPA team will help you with the following issues:
- Determining the type of entity most suitable for your business
- Establishing a business entity
- Obtaining all tax ID numbers and business licenses
- United States tax expertise
- Relocating employees to United States
- Transfer pricing consulting and establishing United States payroll
Our team is fluent in English and Spanish. We are licensed to operate in Georgia and Puerto Rico.
Call 404-445-8095 and ask for Victor Delerme.
If you have a foreign bank account that has not been reported to the IRS, then you could be facing serious civil penalties and even criminal penalties. These penalties fall under the Foreign Bank Account Report, FBAR violations.
To illustrate, the IRS Dirty Dozen tax scam list for 2016 clearly illustrates the emphasis placed upon hiding money or foreign bank accounts (see excerpt below).
The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its annual list of tax scams known as the “Dirty Dozen” for the 2015 filing season.
“Our continued enforcement actions should discourage anyone from trying to illegally hide money and income offshore,” said IRS Commissioner John Koskinen. “We have voluntary options to help taxpayers get their taxes and filing obligations in order.”
Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 54,000 disclosures and we have collected more than $8 billion from this initiative alone. The IRS conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.
The IRS continues to beat this drum more aggressively each year. If you would like to discuss this situation, simply call 404-445-8095 and ask for Victor Delerme.
Delerme CPA is a highly respected CPA Firm with two offices in Atlanta, Midtown Atlanta and Perimeter. We work with all types of businesses throughout Atlanta helping them minimize their tax obligations legally. For additional expertise, we provide International Taxation, Expatriate and Inpatriate Tax Services, and help foreign business owners establish businesses in the United States. Our staff is fluent in English and Spanish. Our International Tax specialty has enabled us to work with clients in South America, Central America and throughout the Carribean.
Did you know that you could get a tax deduction for manufacturing goods in the United States? As incentive to get manufacturers to produce goods in the United States, taxpayers have the luxury of getting a tax deduction.
How much of a deduction?
- As of 2010, a taxpayer can have a deduction of up to 9% on either their taxable income, or of their qualified production activities income (QPAI), whichever of the two is lesser.
- Keep in mind, the amount of your deduction cannot exceed 50% of the W-2 wages of the employer, for that taxable year.
What is QPAI?
- Qualified production activities income is an income from domestic productions.
- In order to calculate your QPAI, it’s your Domestic Production Gross Receipts(DPGR) minus, the sum of:
– Cost of goods sold allocable to the DPGR, and
– Other expenses, losses, or deductions allocable to DPGR
What is DPGR?
- It’s the sum of the gross receipts from:
– The construction of real property done in the U.S. under your construction trade or business.
– Engineering or architectural services done in the U.S. under your engineering or architectural services trade or business for construction of real property in the U.S.
– Any lease, license, rental, exchange, or sale of qualifying production property you manufacture, any qualified film you produce, or natural gas, electricity, or potable water you produce in the U.S.
Alright so let’s recap: Domestic production activities deduction (DPAD) can be up to 9% of either your qualified production activities income (QPAI) or your taxable income. To find (QPAI), you need to know your domestic production gross receipts (DPGR).
*Keep in mind your (DPAD) cannot exceed more than 50% of W-2 wages the employer paid for that taxable year.
If you are a business owner that manufactures goods in the United States, you may want to look into this deduction. Delerme CPA is always willing to help anyone looking to expand and grow your business financially. We’ve helped people use DPAD to help them save money to help expand their business(s). If you have any questions or concerns give us a call. Have a nice day.
For many businesses, profits vary from year to year. However, with proper planning, even a bad year can be helpful from a tax perspective. Where business deductions exceed gross income, a taxpayer may have a net operating loss (NOL) that can be used to offset income in another tax year, potentially generating a refund of previously paid taxes.
Who May Use an NOL?
NOLs are available to individual business owners, corporations, estates, and trusts. Partnerships and S corporations do not take NOL deductions, though their partners and shareholders may use “passed through” losses on their own returns.
How Is an NOL Applied?
The general rule is that a taxpayer may carry an NOL back two years and forward 20 years, though certain limited exceptions may apply. For example, an individual with an NOL that was caused by a casualty, theft, or disaster may use a three-year carryback period.
In general, the taxpayer will carry back an NOL to the earliest year it can be used and then carry it forward, year by year, until it is used up. The taxpayer may also elect to forego the two-year carryback and carry the loss forward for the 20-year period. However, the general preference is to use an NOL sooner rather than later because a dollar of tax saved today is generally worth more than a dollar saved in the future.
How Is an NOL Calculated?
Calculations of NOLs can be complicated. For example, a noncorporate taxpayer’s NOL is calculated without regard to any personal exemptions or NOLs from other years, and certain deductions for capital losses and nonbusiness items are limited.
If you are tired of overpaying taxes and would like a tax partner, call 404-445-8095 and ask for Victor Delerme.
Depreciation deductions can be extremely valuable for a business. For example, in a recent court case, a federal judge ruled a company could begin taking its depreciation deductions for two buildings housing retail stores at a point prior to when they were “open for business.” The ruling allowed the company to show a loss for that tax year, which the company then used to offset income in earlier years and ultimately claim a total tax refund of over $2 million.*
Although this case involved a special 50% depreciation allowance made available by the Gulf Opportunity Zone Act of 2005, the fact remains that even regular depreciation deductions can significantly reduce a company’s tax bill.
If business property has a useful life greater than one year, the owner generally is prohibited from deducting the full cost of the property in the year it is placed in service. Instead, a portion of the cost may be deducted each year as depreciation. The depreciation rules apply to most types of tangible property, with notable exceptions being inventory and unimproved land.
Different schedules specify the proper depreciation calculations for different types of property. The most widely used schedules are set forth under the Modified Accelerated Cost Recovery System (MACRS). MACRS assigns property to a recovery class based on the property’s “class life.”
For example, office equipment is assigned to the seven-year MACRS class. Assume a business purchased a piece of equipment for $20,000 and placed it in service in 2012. The property would be in its fourth year of service in 2015. Applicable IRS tables indicate that the appropriate deduction percentage is 12.49% of the cost, so the business could deduct $2,498 for that equipment in 2015.**
Placed in Service
As the above-mentioned court decision suggests, the date property is placed in service can be an important consideration. Though the IRS has specific definitions for different types of assets, generally, property is first placed in service on the date the taxpayer first places it “in a condition or state of readiness and availability for a specifically defined function.”
Because the definition is broad, taxpayers sometimes litigate how it should be applied to specific situations. In the decision mentioned above, the key issue was the “placed-in-service” date of two buildings that would eventually be used as building supply stores. The IRS had argued that the “placed-in-service” requirement meant that the buildings had to be open for business for retail customers. The court disagreed, however, holding that the buildings were placed in service when they were substantially complete and limited certificates of occupancy had been issued so that workers could enter the buildings to install necessary racks and shelving.
Businesses may be able to benefit from the tax law’s Section 179 provisions to garner faster write-offs for some of their asset purchases. Currently, businesses will be allowed to expense up to $25,000 of qualifying property placed in service during the 2015 tax year, with that limit subject to further reduction once the amount placed in service exceeds $200,000.*** In addition, a current deduction may be available for certain limited amounts paid for property that the business expenses for financial accounting purposes. We can tell you more about these “de minimis safe harbor” regulations.
If you are tired of overpaying taxes, call 404-445-8095 and ask for Victor.
Delerme CPA helps businesses minimize their tax obligations legally and depreciation is one of those tools that helps us minimize your taxes. To service the Atlanta market, we have offices in Midtown Atlanta and Perimeter Center. While we work with all types of businesses, we have additional expertise in hotel accounting, restaurant accounting, and international taxation.
* Stine, LLC v. USA (DC LA, 1/27/2015)
** Calculation assumes the half-year depreciation convention.
*** Congress kept the Section 179 limit at $500,000 for 2014 in late-year extender legislation.
If you have a foreign bank account that has not been reported to the IRS, then you could be facing serious civil penalties and even criminal penalties. These penalties fall under the Foreign Bank Account Report, (FBAR) violations.
First, it is important to determine if you are required to report your foreign bank account. It comes down to being able to say yes to the following four questions:
- You are now a US citizen or permanent resident or have been in the last six years.
- You have had a foreign bank account for a year or longer since 2008.
- Your balances in all of your foreign accounts exceed $10K
- You have not reported the account through the FBAR paperwork to the IRS.
The civil penalties for not filing the FBAR will be the greater of 50% of your bank account or $100K. The IRS has also indicated that it is willing to charge these penalties cumulatively for up to four or even six years.
This means that you can be charged these penalties for each year you have had the foreign bank account and not reported it to the IRS regardless of the fact that the penalties may well out pace the actual dollar amount in your account.
In addition to expensive civil penalties, you can also face criminal penalties. If the IRS determines that you willfully knew that you should have filed a FBAR and didn’t, they can charge you under FBAR violation laws as well as normal criminal tax prosecution laws.
A criminal prosecution typically occurs when a person has a large amount of taxable income in their foreign bank account that has not been claimed on their tax return.
A tax accountant or tax attorney can walk you through your options if you find yourself in this situation, as the IRS does offer voluntary disclosure programs, but even with taking advantage of one of these programs, you will still suffer the sting of IRS penalties.
If you are looking to avoid tax issues with the IRS, call 404-445-8095 and ask for Victor Delerme.
Delerme CPA is a United States CPA Firm licensed in Georgia and Puerto Rico. We work with businesses and individuals all over the Latin America, South America, Carribean and throughout the Southeast. We are multilingual CPA’s and international tax compliance is our expertise.
For many that are native to Puerto Rico, the island’s economy is forcing them off the island and onto the main land of the United States. Puerto Rico’s economy is in a death spiral and families are losing their homes and businesses, so why do the rich continue to flock there? The answer can be summed up in two words: tax exemptions.
While the middle and lower economic classes are streaming off the island, the super rich are taking advantage of tax exemptions enacted in 2012 to help the economy. Simply put, Puerto Rico are offering tax exemptions to rich Americans, so they will buy existing businesses and open new ones.
These tax exemptions, which fall under the 2012 Export Services Act and the Individual Investors Act, provide non-residence investors a 3 to 4% flat income tax, zero property tax, as well as 0% tax on earnings and profits.
In addition, investors can enjoy a0% tax on dividends and interest as well as a 0 to 10% tax on long-term capital gains. When compared to tax rates of up to 20% in the United States, it can be quite the incentive for rich investors.
For example, hedge fund owner John Paulson is currently investing $1.5 billion dollars in real estate on the island in the form of luxury resorts and hotels such as the Condado Vanderbilt Hotel and the St Regis Bahia Beach Resort.
While Puerto Rico’s debt crisis continues to worsen, and about 200,000 residents are leaving each year, you can expect the influx of American investment money to continue for the foreseeable future.
Delerme CPA is a certified public accounting firm in Atlanta GA. We are also licensed to operate in Puerto Rico and bilingual. If you are considering a move, call 404-445-8095 and ask for Victor Delerme.
Delerme CPA provides international tax services to businesses and individuals. Our tax services include for business owners include international tax planning, export incentive planning (IC-DISC), foreign tax credits, transfer pricing and much more. For individuals, we provide expatriate tax preparation, inpat for foreign nationals, foreign bank reporting (FBAR), and pre-immigration tax planning. We also help small businesses set up their business within the United States.
Section 179 allows a business to deduct the total cost for qualified leased, financed, or purchased equipment in the year it was purchased instead of depreciating the cost over the life of the equipment. Typically, however, Congress waits until after the first of the year to renew this section which can hurt small business owners and manufacturers as well as farmers, dentists, and medical providers.
Very often, Congress doesn’t get around to renewing tax breaks, such as Section 179, until well after the end of the year. Then they make it retroactive. This creates all sorts of issues for businesses who attempt to plan purchases with tax breaks in mind. Often, small businesses will miss out on the tax altogether.
While tax breaks such as Section 179 are typically renewed each year, it isn’t a given. That means businesses as well as farmers and even those in the medical profession won’t know if they are allowed to deduct $25,000 or $500,000. The final approved amount depends on whether or not the larger deductions are renewed. If not, the limit reverts to the original $25,000.
This can make a buying decisions difficult. For example if a farmer needs to buy a new combine, the farmer is looking at an investment of up to half a million dollars. If Section 179 isn’t renewed at the higher levels, this investment may need to be reconsidered. The same goes for medical or manufacturing equipment.
Still, for a small business, even the limit of $25,000 can make a tremendous difference. As off-the-shelf software also qualifies for this deduction, a small business could update their software to enhance efficiency therefore increasing their bottom line.
Tax planning is a critical component of a successful company. That’s why it is so important for Congress to act quickly and in a timely manner, so small businesses can plan for the next year while they still have the time to implement smart decisions. Small businesses are the backbone of this county and do drive the economy, and Congress shouldn’t forget that.
If you are tired of overpaying taxes, call 404-445-8095 and ask for Victor Delerme.
Delerme CPA is a top rated Atlanta CPA Firm. Our practice services all types of businesses and individuals with an emphasis on tax matters. For additional expertise, we have boutique tax services for restaurants, hotels and international taxation.
A federal jury trial awarded $21.5 million in damages to a Springfield, Illinois man who was injured by an automatic sliding-glass door on a Holland America Line cruise ship dating back to 2011.
The personal injury damages awarded by the jury were $5M, which are tax free. The punitive damages were $16.5M which means a windfall for the IRS. That’s right, the entire $16.5M is taxable and the attorney fee, which is normally contingent for personal injury cases (30-40% contingent fee), will be challenging to deduct. That means the IRS will get the largest share of the $16.5M and the attorney will get a large cut as well.
Shockingly, it pays to evaluate the tax implications into your legal decisions when the punitive awards could create a huge tax bill.
As you might suspect, Holland America Cruise has appealed the verdict so a settlement for an amount less than $21.5M, but a higher award for personal injuries (higher than $5M) may be a win win solution.
Delerme CPA is a Atlanta CPA Firm with two convenient offices, Midtown Atlanta and Perimeter Village. If you are seeking to minimize your tax situation, call 404-445-8095 and ask for Victor Delerme. Our initial consultation is free.