An Accountants Advice On Tax Efficient Giving Through Gift Aid

The annual ‘Children in Need’ appeal will be taking place next week, on Friday 18 November, so it is a good time to be reminded how Gift Aid can increase the value of donations to charity.


How does it work?
A cash gift you make to a charity under Gift Aid is treated as if you had deducted basic rate tax before you made the payment. So, for example, a payment of £80 is treated as a gift of £100 less tax at 20%, and the charity can reclaim the £20 from HMRC.

If you are a basic rate taxpayer there is no more to consider, but if you are a 40% or 50% taxpayer you are entitled to tax relief at your marginal rate for the £100 gift. So, a total amount received by the charity of £100 costs a basic rate taxpayer £80, a 40% taxpayer £60 and a 50% taxpayer £50.

If the gift is made to a body such as the Charities Aid Foundation, it will reclaim the basic rate tax and add it to the original gift, leaving the donor with, effectively, a bank account of charitable funds to distribute to individual charities as he or she wishes by standing order, debit card or cheque, or online.

Are there any formalities?
Yes, you must complete a Gift Aid declaration that includes your full name, your home address, the name of the charity, and the amount of your donation. It must also state that the donation is being made under the Gift Aid scheme.

Is it as simple as that?
Nearly. You must pay an amount of income tax or capital gains tax in the tax year concerned that is at least as much as the basic rate tax you are treated as having deducted from your Gift Aid donations; otherwise HMRC may recover from you the tax the charity has reclaimed.

Can I carry my gift back or forward to different tax years?
You cannot carry gifts forward, but you can carry them back to the year before you actually made them, provided you paid enough tax in that year to cover the basic rate tax both on the gifts for that year and on the gifts carried back. Depending on your circumstances this might give you tax relief at a higher or lower rate; it will certainly give you relief earlier if you are a 40% or 50% taxpayer.

Your request to carry gifts back must be made to HMRC before or at the same time as you submit your tax return for the earlier year, and no later than the filing deadline; i.e. 31 October after the year-end for a paper return and 31 January after the year-end for an electronic return.

Separate rules apply to gifts of land and buildings, or listed shares, to a charity.

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Deductions You Shouldn't File

All of my articles have been about deductions and credits have been beneficial ones that will save you money and give you a great return. In the Halloween spirit I have decided to list some deductions people have filed on their taxes that they shouldn't have. Included are reports of arson, drug trafficking, and a few others that should definitely show you that the Internal Revenue Service is serious about what you put down on your taxes, and they are looking.

Hiring a person to burn your failing business down for the insurance money happens more often than you might think. To make it worse the greedy sneak not only collected his insurance money, but he pulled a stunt that most people wouldn't dream of trying. The man tried to deduct the money he hired the arsonist with on his taxes! This not only made him an accessory and a felon, but if he was audited he couldn't even present the hired hand's employment form. Do not try this unless you want to get caught.

Making sure your family has the best air quality possible is a noble effort, however futile it is with all the pollution we fill our atmosphere with every day. A man took this ideal and ran with it, so much so that he listed a deduction as “pure bubble.” The IRS agent who audited and inquired further about the man's efforts to make his home have the purest air possible was laughing so hard at this guy trying to deduct his purified air he waived all penalties, but not enough to put his deduction though, as it was still denied.

Being a drug lord is hard, but you're probably looking into the wrong line of work if you think the tax system of our Government is going to look highly on you claiming your drugs on your taxes. One entrepreneur listed a crop of marijuana as a deductible expense, and his honesty was not the best policy in this situation. His tax dollars were safe, but his cash crop and his property went “up in smoke” for lack of a better term.

It's common knowledge that the wedding industry is enormous, and extravagant. Being a 60 billion dollar industry means it's also very expensive. One cheap father had the brilliant idea to invite a few of his business clients to the wedding, which he attempted to use as leverage to write off his daughter's entire wedding as an entertainment expense for his business! This, to no one's surprise, was flagged by the IRS and he was forced to not only foot the bill for the wedding, but pay some hefty fines as well. Sometimes if you know they will say no, don't try it.

Your animals are special to you. They are even considered family by most. The Internal Revenue Service, however, does not consider your animals dependents. To some who have no children and only animals it may seem unjust, but having them under your care doesn't save you more on your taxes. It may suck you can't deduct that overpriced toy you bought them that they don't even give a second look to, but they're still your friends forever.

You may think a professional doing a procedure on your body for modification purposes may sound like something you can claim on your taxes, tattoos are an elective procedure. This prohibits you from using them as a deduction, and the IRS will not look too kindly on your personal forms of self expression. Yet another reason to think twice before you lay down under the knife or the needle.

In order to prevent these kinds of deductions going on your record, let Online Tax Pros make sure you qualify for everything you can claim, and step in to tell you what you can't claim. We are ready to get the most out of your return so your taxes don't have to be scary this Halloween!

More about → Deductions You Shouldn't File

Deductions You Shouldn't File

All of my articles have been about deductions and credits have been beneficial ones that will save you money and give you a great return. In the Halloween spirit I have decided to list some deductions people have filed on their taxes that they shouldn't have. Included are reports of arson, drug trafficking, and a few others that should definitely show you that the Internal Revenue Service is serious about what you put down on your taxes, and they are looking.

Hiring a person to burn your failing business down for the insurance money happens more often than you might think. To make it worse the greedy sneak not only collected his insurance money, but he pulled a stunt that most people wouldn't dream of trying. The man tried to deduct the money he hired the arsonist with on his taxes! This not only made him an accessory and a felon, but if he was audited he couldn't even present the hired hand's employment form. Do not try this unless you want to get caught.

Making sure your family has the best air quality possible is a noble effort, however futile it is with all the pollution we fill our atmosphere with every day. A man took this ideal and ran with it, so much so that he listed a deduction as “pure bubble.” The IRS agent who audited and inquired further about the man's efforts to make his home have the purest air possible was laughing so hard at this guy trying to deduct his purified air he waived all penalties, but not enough to put his deduction though, as it was still denied.

Being a drug lord is hard, but you're probably looking into the wrong line of work if you think the tax system of our Government is going to look highly on you claiming your drugs on your taxes. One entrepreneur listed a crop of marijuana as a deductible expense, and his honesty was not the best policy in this situation. His tax dollars were safe, but his cash crop and his property went “up in smoke” for lack of a better term.

It's common knowledge that the wedding industry is enormous, and extravagant. Being a 60 billion dollar industry means it's also very expensive. One cheap father had the brilliant idea to invite a few of his business clients to the wedding, which he attempted to use as leverage to write off his daughter's entire wedding as an entertainment expense for his business! This, to no one's surprise, was flagged by the IRS and he was forced to not only foot the bill for the wedding, but pay some hefty fines as well. Sometimes if you know they will say no, don't try it.

Your animals are special to you. They are even considered family by most. The Internal Revenue Service, however, does not consider your animals dependents. To some who have no children and only animals it may seem unjust, but having them under your care doesn't save you more on your taxes. It may suck you can't deduct that overpriced toy you bought them that they don't even give a second look to, but they're still your friends forever.

You may think a professional doing a procedure on your body for modification purposes may sound like something you can claim on your taxes, tattoos are an elective procedure. This prohibits you from using them as a deduction, and the IRS will not look too kindly on your personal forms of self expression. Yet another reason to think twice before you lay down under the knife or the needle.

In order to prevent these kinds of deductions going on your record, let Online Tax Pros make sure you qualify for everything you can claim, and step in to tell you what you can't claim. We are ready to get the most out of your return so your taxes don't have to be scary this Halloween!

More about → Deductions You Shouldn't File

UPS AND DOWNS IN GST

In our previous article we had discussed about the issues which are coming in the way of the rolling on the GST. Among these issues, the major one is the “Veto Power”.

The earlier draft was rejected by the states in the meeting of the Empowered Committee of the States Finance Ministers after they said it has vested the Union Finance Minister with a Veto power over the States taxation issues. This draft had proposed setting up of a GST council to take decisions on the GST with the consent of the Union Finance Minister and two-third majority of the States.

However, the revised draft of the Constitution Amendment Bill on GST drops the contentious issue of giving veto power to the Union Finance Minister in order to bring states on board. The revised draft proposes that any decision on GST can be taken only if there is a complete consensus between the Centre and the States. Also, the Union Finance Minister will remain the Chairman of the Council which will take decisions on the indirect tax system and States will be given Deputy Chairmanship of the council on a rotational basis. Besides the revised draft also said that any decision taken by the GST council, that will govern all issues on indirect taxes, will not be binding on the states. This point is mainly covered in the revised one because of the “autonomy” concerns of the states.

Now the question comes why the Government is basically focusing on the Constitutional Amendment Bill? Currently, the Centre can impose tax on goods at the factory gate and services while states can impose tax at the retail level of goods. States do not have the power to tax services. The proposed single tax will, therefore, require constitutional changes to allow Parliament and state assemblies to impose tax on the same items.

Union Finance Minister Pranab Mukherjee, who met State Finance Ministers in an effort to make a consensus for the introduction of a Constitutional Amendment Bill in the ongoing monsoon session of Parliament, could not convince all the states to agree to diluted proposals. It was expected that diluting the Veto power of the Centre, proposed in the earlier draft, would satisfy the states particularly the BJP ruled ones and they would support the rolling on of the GST. But the news which came from the BJP side put aside all the expectations of the Finance Minister. While initially only, Chattisgarh and Madhya Pradesh were among the NDA states opposing the implementation of the GST but now all the eight states including Gujurat, Karnataka, Himachal Pradesh, Uttarakhand have voiced their Opposition.

Opposing States are basically asking for one month time to study the revised draft bill. Therefore the Government is in a fix over the introduction of the Constitutional Amendment Bill on the Goods and Service Tax during the current session of Parliament. GST has already missed the original deadline of April 2010. If the bill is not introduced in the monsoon session, the Government will find it difficult to meet the April 2011 deadline also.

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Deductions For Property Owners

As a real estate owner, you try to make the most money you can in this troubled economy. Renting out your properties can be a great form of income, but you may not know all the deductions you qualify for to reduce the income taxes for your profits and gains. If you're new to investing, you may not even know there are two classifications of real estate investors. First, is the passive investor, and the other is a real estate professional. This classification is important for figuring out exactly what you can deduct.

As a real estate professional, your losses are not passive. This gives you fully deductible losses in all your incomes, either passive or not passive. If you're a passive investor, however, you losses are only deductible up to $25,000. The redeeming quality is that any losses that are more than that amount can be put on next year's taxes.

To qualify as a real estate professional you must spend more than half of your employed time putting into your rental business. Working on your rental business includes, but is not limited to, development of property, management, maintenance and construction. More than 750 hours must be put into your properties.

Some common income sources that can be considered taxable are rental income, tenant-paid expenses, and security deposits. First, rental revenue can only be considered taxable in the year you receive it, so advance payments must be put in with your taxable income. Next, expenses your tenants may pay for things like appliance repair can be deducted as a rental expense. Finally, security deposits are an exception in that they are not taxable at first. If your tenant causes damage, however, and you use the deposit for repairs, it can be counted as income and a deductible expense.

The Internal Revenue Service may have different ideas than you do when it comes to repairs and improvements of your rental properties. A good rule of thumb for what is deductible is that your repairs are deductible because they keep your rental property in good condition. Improvements that increase the value of your properties are not deductible. Keeping up on repairs is more of a tax-friendly practice then letting them accumulate until you need a renovation.

Some more common deductions include mortgage and travel expenses. Your mortgage payments are not deductible, but the part that goes towards your interest is. Travel expenses which includes going to collect rent and maintenance of your rental property, unless the trip's purpose was for improvements or renovations. Other expenses people may already know about are lawn care, environmental losses, and insurance are deductible.

Keeping good records is the most important part of your deductions. In the event of an audit the more receipts and proof of your payments the better. Just being prepared like you're being audited every year will allow you to take advantage of all these deductions. Using a qualified tax professional like Online Tax Pros can be the difference in your return being good or great. Let us put our expertise into your taxes to get you the most out of your return this year.

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The Reason Why You Need A Good IRS Tax Attorney

The economic chaos hit most areas of the modern world hard these previous few years. Most people are finding it difficult to pay their taxes for that reason. If you fail to observe tax office rules , you may find yourself having a frozen account, involved with a foreclosure,or  facing the likelihood of jail time. Seeking out the services of a tax relief attorney helps you discuss provisions with the IRS to help you settle what you owe with no need of having these unexpected things happen. All these industry experts  relay your concerns and motives to the IRS in a way they can comprehend and recognize. Their main objective is always to defend your legal rights as a tax payer during  your time of need.

Exactly what situations require an IRS tax attorney? Some of the most frequent reasons are inability to pay off taxation, inability to file for necessary forms, and inability to fix mistakes on tax returns. A lawyer well versed in taxes can take care of both personal and business-related instances. They will help you to bargain with the IRS  so your taxes may be put in order once again.

Should you understand absolutely nothing regarding your taxes, speak with them and with your accountant immediately. They can discuss the framework to you and reply to all your concerns. A tax relief attorney needs to be knowledgeable in managing finances as well. You may ask them for choices on payment schemes which tax offices offer and exactly how you are able to work one around your current fiscal state. Speak with them prior to running into problems because as people say, prevention is much better than cure.

Get their services to guide you with the paperwork as well. Many people make mistakes when filing their very own tax return documents. This is a major headache when dealing with the tax offices. There's a chance you're forking over not quite what is mandated by legislated rules and find yourself incurring tremendous tax debts. Having them aid you with your tax documentation can help you avoid this later on.

If you are already in a tough instance,  speak to  an IRS tax attorney right away. They will certainly assess your fiscal status and also your intentions to settle. This enables you to enter a deal with the IRS instead of facing stiff charges and potential jail time. They could also put a stop to  a credit card company from freezing your properties and assets. If you're scared of having your home repossessed in a foreclosure or can not pay your debts because of frozen bank account, these lawyers will prevent these  from going down.

Never get caught in a position where you need to fix your fiscal troubles and taxation issues. File your income taxes accurately and pay your obligations promptly to stay away from struggles. Addressing the issues that come with these problems is not hard once you hire your own tax relief attorney. It is always more desirable if you get their services to help you do the right thing by correcting a blunder you might have already made.

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Accounting Services

Accounts are one field which requires a person to be extra cautious. You have to be very careful while performing any task in this field. It is very much similar to maths, but not the same. If you think that you are good at memorizing theory and doing something related to theory subjects then this is not the field for you. This area needs people who are good with practical problems and the ones who know what they are doing. Hence accounting cannot be done by everyone. The ones who have a clear base in this subject will be the masters in it.

Accounts are not only studied as a subject in schools and colleges. But, it is being widely used all over the world. If you look carefully you will see that it is present in everything that we do. For example, when we visit a shop, we buy clothes from there. The transaction of buying and selling clothes involves the accounting of money spent and gone. In this manner you will come across this field in your daily life. Various huge organizations need special people who are trained in this field. Accounting services are required by such organization in order to prepare regular records of their business transactions.

These people are professionals in this field and they are very much aware of what they do. Organizations like these are always in requirement of such people. They are huge businesses which deal with other huge businesses. They involve a lot of buying and selling. Therefore to keep a proper record of all these activities, the services of these professionals are needed. Such experts are trained from a renowned accounting institution and are very fluent with the subject. If any one of them has previously worked with any other organization then they are very experienced in it.

Such people are so much in demand. This is because this job requires a lot of attention and careful attitude. This kind of nature is not found in everybody. Hence everybody wants them. Accounting services of a person can be availed by looking at that person’s previous experience in this field. When you look at the previous experience you will see the amount of work done by him/her. On the basis of that you can recruit that person. Even the salary of these experts is extremely high. On an average, they earn way too much than a normal person.

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