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Get ready for taxes: What to do before the tax year ends Dec. 31

As tax filing season approaches, taxpayers should remember there are things they can do before the end of the year. Doing these will help people get ready for the upcoming tax filing season.

Here are a few things taxpayers still have time to do this year:

Donate to charity
For those who plan to itemize deductions, there is still time to make a 2019 donation. Taxpayers who itemized in the past should remember that the standard deduction has increased. This may limit or eliminate the itemized deductions for many taxpayers.

Report an address change
Taxpayers who moved should notify the IRS of their new address. They should also remember to notify the Social Security Administration of any name change.

Renew expiring ITINs
Certain individual taxpayer identification numbers expire at the end of this year. Taxpayers can visit the ITIN page on IRS.gov for more information on which numbers need renewal.

Connect with the IRS
Taxpayers can use social media to get the latest tax and filing tips from the IRS. The IRS shares information on things like tax changes, scam alerts, initiatives, tax products and taxpayer services. These social media tools are available in different languages, including English, Spanish and American Sign Language.

Find information about retirement plans
IRS.gov has end-of-year find tax information about retirement plans. This includes resources for individuals about retirement planning, contributions and withdrawals. Taxpayers who are 70½ and over can still take a required minimum distribution from traditional IRA, SIMPLE IRA, SEP IRA, or retirement plan accounts. Taxpayers who reached 70½ in 2019 can wait until April 1, 2020, to receive their first required minimum distribution.

Contribute salary deferral
Taxpayers can make a deferral to a retirement plan. This helps maximize the tax credit available for eligible contributions. Taxpayers should make sure their total salary deferral contributions do not exceed the limit for 2019.

Think about tax refunds
Taxpayers should be careful not to expect getting a refund by a certain date. This is especially true for taxpayers who plan to use their refund when making major purchases or paying bills. Just as each tax return is unique and individual, so is each taxpayer’s refund. Taxpayers can take steps now to make sure the IRS can process their return next year.

More information:
Retirement Plan and IRA Required Minimum Distributions FAQs
About Schedule A, Form 1040, Itemized Deductions
Tax Topic No. 500 Itemized Deductions
Interactive Tax Assistant

How taxpayers can make sure their donations are tax deductible

It’s that time of year when taxpayers are thinking about how they want to give back, and many taxpayers will want to donate to a charity that means something to them. The IRS has a tool that may help them make sure their donations are as beneficial as possible.

Tax Exempt Organization Search on IRS.gov is a tool that allows users to search for tax-exempt charities. Taxpayers can use this tool to determine if donations they make to an organization are tax-deductible charitable contributions.

Here are some things to know about the TEOS tool:

It provides information about an organization’s federal tax status and filings.
It’s mobile device friendly.
Donors can use it to confirm that an organization is tax-exempt and eligible to receive tax-deductible charitable contributions.
Users can find out if an organization had its tax-exempt status revoked.
Organizations are listed under the legal name or a “doing business as” name on file with the IRS.
The search results are sortable by name, Employee Identification Number, state, and country.
Users may also download entire lists of organizations eligible to receive deductible contributions, auto-revoked organizations and e-Postcard filers.

Taxpayers can also use the Interactive Tax Assistant, Can I Deduct my Charitable Contributions? to help determine if a charitable contribution is deductible.

You’re going to start a non-profit and save the world!

You have the best idea. You know just what will help. You’ve talked to friends and they are onboard or supportive. You’re going to start a non-profit and save the world!

First things first

Just like a for-profit business you need to organize. You’ll want to visit IRS.gov Charities and Nonprofits section and figure out what sort of organization you will become. Are you a church or spiritual organization? Are you a school? Are you filling a need in your community? Write out your mission statement (you will use this later) and dive in.

You, of course, will have to take many of the same steps any business will take such as forming your organization, enlisting a Board of Directors, writing ByLaws, applying for an EIN, applying to your state for an employer identification number, opening a bank account…

What about those donations?

You can operate as a non-profit organization and collect donations and hit the ground running. What you can’t do is offer your donors any tax benefits, or have your organization be tax exempt unless and until you have applied for and received a 501(c)3 determination from the IRS. Keep in mind too that you will likely also have to apply for your state’s tax exempt status as a separate application if you want your organization to be relieved of paying state tax on the organization’s income.

Tax filing

You still do have to report to the IRS and your state what your organization has brought in each year on what programs. If you are a small organization your filing can be as simple as an electronic postcard. But do keep in mind your organization has been given an “exempt purpose” by the IRS, so if your purpose is to provide meals for homeless pets, then the funds you raise to provide that service will be tax exempt. If, however, you start selling T-shirts in a local shop with cute puppies – even if your proceeds will go towards those same puppies breakfast – you are not in the T-shirt selling business and are therefore subject to paying tax on that income.

Be good at doing good

Even though your purpose may be altruistic you still need to think like a business. And all businesses need to keep good books in order to continue. You will already be in the habit of asking for help, so don’t forget to get help with your books and accounting!

Tool on IRS.gov helps taxpayers research charities before making donations

Tool on IRS.gov helps taxpayers research charities before making donations

When people are done giving thanks at the dinner table, many start another kind of giving. The annual Giving Tuesday happens the week after Thanksgiving to kick off the season of charitable giving. This year, Giving Tuesday falls on Tuesday, November 27.

Taxpayers may be able to deduct donations to tax-exempt organizations on their tax return. As people are deciding where to make their donations, the IRS has a tool that may help. Tax Exempt Organization Search on IRS.gov is a tool that allows users to search for charities. It provides information about an organization’s federal tax status and filings.

Here are four facts about the Tax Exempt Organization Search tool:

Donors can use it to confirm an organization is tax exempt and eligible to receive tax-deductible charitable contributions.
Users can find out if an organization had its tax-exempt status revoked. A common reason for revocation is when an organization does not file its Form 990-series return for three consecutive years.
EO Select Check does not list certain organizations that may be eligible to receive tax-deductible donations, including churches, organizations in a group ruling, and governmental entities.
Organizations are listed under the legal name or a “doing business as” name on file with the IRS. No separate listing of common or popular names is searchable.

Taxpayers can also use the Interactive Tax Assistant, Can I Deduct my Charitable Contributions? to help determine if a charitable contribution is deductible.

Taxpayers may also want to decide now if they’ll itemize their deductions when they file next year. Last year’s tax reform legislation made changes to the standard deductions and itemized deductions. Many individuals who formerly itemized may now find it more beneficial to take the standard deduction. So, taxpayers should check their 2017 itemized deductions to make sure they understand what these changes mean to their tax situation for 2018. More information about these changes is on IRS.gov/taxreform.

Get ready for taxes: What to do before the tax year ends Dec. 31

How taxpayers can make sure their donations are tax deductible

You’re going to start a non-profit and save the world!

Tool on IRS.gov helps taxpayers research charities before making donations

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