Many people and organizations have turned to crowdfunding to raise money for various needs and causes. One of the most popular crowdfunding platforms available is GoFundMe. While many of the entities raising funds on GoFundMe are charitable, some people worry about whether donations they might make via the platform can be deducted from their taxes.

Whether or not donations made on GoFundMe can be deducted from your taxes depends on whether the donee is a qualified 501(c) organization. If the recipient of your donation is a qualified 501(c) organization, then you can claim your donation as a deduction on your tax return. If the recipient is not a 501(c) organization, your donation is considered personal and can’t be deducted. Here is some more information about crowdfunding donations and when they can be deducted from the tax professionals at TMD Accounting.

When Are GoFundMe Donations Tax Deductible?

Originally starting as CreateA Fund in 2008, GoFundMe changed its name in 2010 and is a crowdfunding platform that can be used to raise money for nearly anything. Donations made on the platform are considered to be personal unless they are given to a qualified 501(c) organization.

If you give money to a non-501(c) organization on the site such as an individual who is trying to raise money for any purpose, your donation will be considered to be a gift and not a tax-deductible charitable donation. Even if you make a gift for a charitable purpose, it won’t automatically qualify you for a deduction.

Another thing to watch for is how much money you donate to an individual on GoFundMe. Since these types of gifts are not considered to be charitable by the Internal Revenue Service (IRS), if you give more than the annual exclusion amount for gifts, you might have to report what you gave and file a Form 709. The recipient will not be taxed on the amount they received.

How GoFundMe Works

Individuals, groups, or organizations can all raise funds on the GoFundMe platform. The site distinguishes between types of fundraisers, including standard campaigns and certified charity campaigns. Many organizers of standard campaigns are people who are raising money for any number of reasons and who can deposit any money they raise into their bank accounts.

While many standard campaigns are for worthy causes, the gifts that are made are given to individuals instead of registered charities. Donations to them are generally not tax deductible.

By contrast, certified charity campaigns are established by registered 501(c)(3) organizations. The organizers don’t handle the funds. Instead, the money is sent directly to the charitable organization through the PayPal Giving Fund. This is a fund that was created by GoFundMe to help registered charities receive donations. When you donate GoFundMe to a registered charity, you will receive a receipt from the giving fund so that you can claim a deduction on your tax return.

When GoFundMe Donations Are Tax Deductible

There are two exceptions under which a donation on GoFundMe could be tax deductible. First, if you give money to a qualified 501(c) organization on the platform, your gift will be tax deductible. Second, GoFundMe has established a program called “GoFundMe Causes”. Through this program, qualified organizations are grouped by their causes. You can make a tax-deductible contribution to the cause you choose, and the donation will be sent directly to the group of verified charities grouped by that cause.

Understanding Gift Taxes

The annual gift tax exclusion for 2022 is $16,000. If you give more than this annual amount to non-501(c) organizations, you could be required to file a gift tax return. While there are exceptions for donations given for educational or medical expenses, the exceptions require the funds to be sent directly to the institutions instead of an intermediary. Funds given on GoFundMe rarely are sent directly to institutions through standard campaigns.

Deductions for Charitable Giving

When you give money to a nonprofit organization, your donation will normally be deductible. You can deduct up to half of your adjusted gross income for cash donations, but there are limits set at 20% or 30% that might apply. Giving money to registered 501(c) organizations on GoFundMe could be a way to reduce your tax burden, but you will need to make sure to save your receipt. To claim a deduction, you will need to itemize your deductions instead of taking the standard deduction using Schedule A. A charitable deduction might be eligible as long as it is given to one of the following:

• Nonprofit hospitals and schools
• Some veterans’ groups
• Local, state, and federal governments
• Religious organizations

Donations to the following types of organizations generally cannot be deducted:

• Political action committees (PACs) or political parties
• Foreign organizations or governments
• Individuals
• For-profit hospitals or schools
• Labor unions
• Sports or social clubs
• Homeowners’ associations (HOAs)
• Responsibilities of Donees

Gifts are generally not considered to be taxable income. However, organizers should keep records to avoid problems.

If a donee receives donations in exchange for services or goods, the IRS might consider the donations to be taxable business income. Be clear in your campaigns that donors will not receive anything of value in exchange for making donations.

If you raise more than $600, the third-party payment processor will send you and the IRS a Form 1099. While the money you raise should not be considered taxable, you will have the burden to show that it was not income. Report the funds you receive on your tax return and then show a reduction of the same amount while including an explanation.

Talk to TMD Accounting

If you are unsure about whether your donations might qualify for deductions, you should talk to the professionals at TMD Accounting. Call us today at 1-856-228-2205.

Self-employed people and small business owners are generally allowed to deduct business travel expenses when they are required to travel away from home for business purposes. However, you need to ensure that you understand the definition of home from the Internal Revenue Service (IRS) and what ordinary and necessary expenses are to ensure you deduct your business travel expenses accurately. Here is what to know about the business travel tax deduction from TMD Accounting.

What Are Ordinary and Necessary Expenses?

The first thing you should understand is how the IRS defines ordinary and necessary expenses. Ordinary expenses are those that are accepted and common within your industry. Necessary expenses are those that are appropriate and helpful for your company.

How the IRS Defines Home

Your business travel expenses can be claimed when you are away from your business home, which is not necessarily where you live. The city in which your business is located is your business’s tax home, which might not be the same place where your family lives.

For example, imagine that you live in Colorado Springs, Colorado and have a permanent business location in Denver. Just because you might stay during the workweek in hotels in Denver and eat out, you won’t be able to deduct those expenses from your taxes or the costs of your transportation when you drive back to Colorado Springs on the weekends. This is because Denver will be your business’s tax home, so you can’t take deductions for your ordinary and necessary expenses during your time there.

Deductible Transportation Expenses

If you have to travel for business by bus, train, or plane, you can deduct the cost of your ticket and baggage fees. If you have to pay for a last-minute ticket, you can claim the higher price as an expense. However, if you pay for the ticket using your frequent-flyer miles, you won’t be able to deduct it.

Transportation expenses can be deducted when you have to travel away from your business’s location for business reasons. For example, if you have to fly from Denver to Los Angeles for a work conference, you can deduct the cost of your airfare to and from Los Angeles. You can also deduct the cost of renting a car in LA while you are there. The IRS allows you to deduct the actual costs or the standard mileage rate. During the first half of 2022, the standard rate was 58.5 cents per mile. For the second half, the mileage standard rate was increased to 62.5 cents per mile. You can also deduct parking fees and tolls you might have to pay during your business trip.

Deductible Taxi Fares

While you are away on business, you can also deduct the fares you pay for taxis or shuttles. The following types of fares you pay can be deducted:

• Fares paid to get to and from the airport, train station, and your hotel
• Fares paid to and from your hotel and your work location
• Fares paid to and from clients in the city

For car rentals, you can deduct the expense as long as you exclusively use the vehicle for business. if you also use it for personal reasons, only deduct the portion of the rental costs that you used for business. For example, if you are in LA and drive to the conference and then back and forth to a few client locations, you can deduct the mileage and rental car expenses for those trips. However, if you later decide to go out to dinner or a movie from your hotel, you can’t deduct the expenses involved with that.

Deductible Incidental Expenses

You can also deduct the costs of your hotel, business meals, and tips as long as they are reasonable under the circumstances. Your meal deduction is limited to half of the actual cost of your meal or the standard meal allowance. The meal allowance is based on the federal per diem rate based on when and where you travel.

In general, business travelers can only deduct 50% of their meals. However, in 2022, the IRS is allowing business travelers to deduct the full cost of business-related meals and beverages that they purchase at a restaurant. If you decide to take the standard meal allowance, the deductible amount for incidental expenses is $5 per day for tips given to staff at your hotel, baggage carriers, or porters. It is still a good idea to keep receipts and track of the actual costs you pay.

What Qualifies as a Business Trip?

To qualify as a business trip and qualify for the business travel tax deduction, your trip must meet each of the following criteria:

• Your trip caused you to leave your business’s tax home for more than a normal work day
• Your trip must primarily consist of business
• Your trip should qualify as an ordinary and necessary expense
• Your trip should be planned in advance

Speak to an Accounting Professional

If you are unsure which expenses you can deduct under the business travel deduction, you should speak to the accounting and tax professionals at TMD Accounting. We can review your receipts and the purpose of your trip and explain what can and can’t be included. To learn more, call us today at 1-856-228-2205.

Having a small-business tax advisor can help your business save money on taxes by working with you year-round. This is a certified professional who prepares and files business tax returns, provides financial and tax advice, and represents businesses when they are audited by the Internal Revenue Service (IRS). Certified tax advisors also perform record-keeping duties and help with tax planning to maximize your business’s returns. The tax advisor you choose should be experienced, qualified, and have specific knowledge about business taxes. Here is some information from TMD Accounting about how to find the right tax advisor for your small business.

What Are Tax Advisors for Small Businesses?

The IRS allows anyone to serve as a small-business tax consultant as long as they get a preparer tax identification number (PTIN) from the agency. However, you should look for a professional firm that offers both small business account services and business tax advice. The professional you choose should also be certified as a tax advisor by the IRS. Certified tax advisors have additional education, skill, and expertise requirements and can also represent you in case of an audit.

Enrolled agents are licensed tax professionals who must pass a specialized exam showing their tax proficiency and/or have worked for the IRS for at least five years.

Certified public accountants (CPAs) must pass the CPA exam and follow the requirements for CPAs. They are accounting professionals offering multiple services, including tax advice, preparation, and filing.

Finally, attorneys must pass the bar exam to obtain a license to practice law in their state. While all lawyers are included in this category, a business owner should look for an attorney who focuses on tax law and business taxes.

If you are searching for a tax advisor for your business, you should choose someone who falls into one of the three categories listed above. Make sure the professional you choose has experience with business taxes instead of personal taxes. Finding a certified tax advisor who is also familiar with your industry and with small businesses is even better.

How a Tax Advisor Can Benefit Your Small Business

A good business tax advisor can help your business in numerous ways throughout the year instead of just at tax time. Your tax advisor should provide you with all of the following benefits:

• Providing important information and advice to aid you in tax decisions
• Setting up a record-keeping system tailored to your business and its needs
• Preparing business tax forms and helping your business claim all of the deductions to which it should be entitled and highlighting red flags that could get your business in trouble with the IRS
• Providing advice and guidance when you are dealing with the IRS
• Representing you before the IRS during audits and investigations

Finding a Tax Advisor for Your Small Business

The first place to start is to ask your business’s accountant or bookkeeper for referrals and recommendations. If you are already working with a CPA for small business accounting services, they might also have the necessary experience to provide you with business tax advising services. You can also ask other business owners that you know and trust for their recommendations for business tax advisors in your area.

You can also ask your friends, banker, family, or attorney for recommendations and referrals to qualified business tax advisors in your area. Get several names. Look for listings in newspapers, directories, trade journals, referral panels, and professional associations. Look for CPA societies in your area or check online at www.cpadirectory.com for a CPA. If you want to find an enrolled agent, you can ask for help from the National Association of Enrolled Agents at www.naea.org. However, if you check an organization, you should consider referrals as the organization’s certification that it recommends the CPAs or EAs or that the names provided to you are competent professionals.

Once you have a small list of names, interview a minimum of three firms or individuals. Treat the consultation like an interview. You want to both test the prospective advisor’s knowledge and ensure that they are a good fit for your company. Ask them about their experience, certification, and their knowledge of your industry and of working with small businesses. Ask about the types of tax issues small businesses might face and how they address them. Ask if the prospective advisor represents clients during audits before the IRS.

Ask the tax advisor about any success stories they can share and the types of strategies they employ when dealing with tax problems. You want to make sure the advisor you choose doesn’t use overly aggressive strategies that could potentially get your business in trouble.

Once you have completed your consultations, don’t rush to make a decision. Consider which prospective advisor made you feel confident in their knowledge and ability to help your business with its taxes. Make sure you choose an advisor with whom you feel comfortable since you will have an ongoing professional relationship. Finally, search for a tax advisor in the fall or summer instead of trying to find someone during tax season.

Find an Accountant for My Small Business

If you are searching for a full-service accounting firm to handle all of your business’s accounting and tax needs, you should consider TMD accounting. We provide a full range of accounting services for small businesses, including tax advice and preparation. Call us today for a consultation at 1-856-228-2205.

Do you need a financial plan for your small business? Creating these types of plans is a crucial step for any business owner. Financial planning can help you to make daily decisions for your business. By comparing numbers to actual results, you can make those crucial decisions regarding your financial future. Even with a one-person company, you should have a financial plan in place. Why are financial plans so important? Keep reading to learn more.

Financial Planning for Your Business

Financial planning is very vital to the success of your business. This planning usually allocates funds to specific areas of your business. Also, financial planning will determine how a company can achieve different objectives and goals. While you might think establishing a business is hard, creating a financial plan can be just as challenging without the right help. Businesses in all industries need to focus on financial planning. However, many small businesses will not use a financial planner because they think those services are too costly.

Financial planning is essential to the overall business operations. Small businesses can’t be financially stable and operate without confidence in their financial plans. Unfortunately, many companies will fail. In some situations, those failures are tied to a lack of financial planning.

What Can Financial Planning Do for Your Business?

There are many ways that a financial plan can affect your business. Small business accounting services can help implement a plan for you. Here is a look at a few of these benefits to financial planning.

Cash Management and Budget

When you have a financial plan in place, you can help organize your short-term budget. Many small businesses will experience variations in revenue on a monthly or seasonal basis. In simple terms, that can translate to a period when there is strong cash flow or a time when a shortage occurs.

Budgeting is a critical task for any business. When you plan out a budget, you can make those financial decisions and allocate funds for different projects. A smart budget will help generate profits while cutting losses and costs. Creating a reasonable budget without a financial plan can be challenging.

Financial plans can assist those struggling small businesses in getting a handle on their budget. Additionally, that financial plan gives companies deeper insight into funds, making it easier to see the bigger picture. You can even break down a complicated budget into more manageable, smaller steps.

Small business owners can consider these cycles by building a solid financial plan. During those slow times, these businesses can monitor those expenditures for low revenue periods. In many cases, poor cash management results in negative consequences, such as not making payroll for your employees.

You should structure your financial plan to have a cash cushion in case of downtimes. With a cash cushion, your small business can take advantage of special opportunities, including purchasing reduced-priced inventory from suppliers.

Long-Range View

On a daily basis, your small business may have to deal with issues or crises. It can be easy to focus on those problems, but that leaves you not thinking about any long-term goals. Unfortunately, that can take away from planning for the future, preventing businesses from growing. A financial plan allows a small business owner to see what expenditures are needed to keep the company on track and stay ahead of the competition. Think of a financial plan as a blueprint to implement the company’s performance for both short- and long-term goals.

Spot Trends

Over the course of a month, a business owner must make critical decisions. Often, it can be hard to tell if those decisions were successful. When you prepare your financial plan, you can set those quantifiable targets to compare with actual results throughout the year. For example, the owner can see if their increase in advertising expenditures led to more sales for the business. These sales trends for individual products can help the owner make decisions about allocating money for marketing.

Prioritizing Expenditures

When you allocate your capital and conserve those financial resources, it can lead to a successful business. These benefits of financial planning can help owners identify their most important expenditures, which can help improve efficiency, productivity, and marketability. Those decisions are often only made when cash is plentiful for the business. Even those well-capitalized corporations will prioritize their expenditures.

Measure Progress

During those early stages of the business, many owners will deal with numerous changes and have to work long hours. Sometimes, it can be difficult to tell whether any progress is being made or if serious problems are on the horizon. Seeing those actual results help small business owners to feel more confident in their decisions. On the other hand, if there is an issue, the owner can take the appropriate steps to correct it. A chart displaying steady revenue growth for each month is a great motivating factor for both new and experienced business owners.

Talk To an Experienced Accountant

If you need help with your financial planning, turn to TMD Accounting. We are a family-owned and -operated business that focuses on helping companies in all industries plan for the future. We offer a flexible, affordable, and convenient way to handle those financial responsibilities. You need to focus on growing your business, and we are the ones to help you.

Need a South Jersey accountant for my small business? Our accounting team is ready to help. Schedule your consultation by calling 1-856-228-2205.

Most taxpayers want to find ways to reduce how much they might have to pay in taxes. A good way to reduce your tax burden is to work with a tax professional. However, many people confuse tax preparation with tax planning. While both types of services are important, they have separate purposes. Here’s some information about the differences between tax preparation and tax planning from the accounting professionals at TMD Accounting.

Understanding Tax Preparation

Most Americans of working age are required to file income tax returns every year. However, the tax filing process can be complicated, leaving many people uncertain about how to file their tax returns properly. Mistakes made on your tax returns could result in you owing more money than you anticipated. Tax preparation services help with filing your tax returns and ensuring they are correct. Most tax preparers will offer help with filing your returns with local, state, and federal tax authorities.

Tax preparers use your financial information to fill out your income tax returns while complying with relevant laws. They also check to see whether you might qualify for deductions or credits that can reduce your tax bill. If your tax situation is complicated, hiring a professional tax preparation service can be helpful. Doing so can also be important if you have undergone recent changes in your life, including a job or household size change.

Understanding Tax Planning

While tax preparation is completed before you file your income tax returns, tax planning is a service that helps you to plan ahead to optimize your situation to minimize or avoid any tax consequences that you might face as a result of your financial decisions. Tax planning can help you make financial choices that are better for your overall financial situation.

Tax planning is geared toward helping you make proactive decisions about specific areas of your finances, including investments, retirement accounts, inheritances, estates, businesses, and charitable contributions that could impact your tax situation. While tax preparers might give you advice when they prepare your tax returns, their advice is typically general and not intended for you to use for proactive decision-making.

Accounting professionals that provide tax planning services thoroughly research to gain a solid understanding of both your current finances and your future goals so that they can make specific recommendations. If you want tax planning, you will need to ask your accountant specifically for this service so that they understand what you are wanting.

If you already use a tax preparer, you might need to look for a different tax professional for tax planning. many tax preparers are only trained to help their clients comply with their tax obligations and might not know enough about the system to make informed and knowledgeable recommendations.

Tax Planning Vs. Tax Preparation

Since you likely are required to file annual income tax returns, you will likely benefit from tax preparation services. You can either choose to complete and file your return by yourself or get help from a tax preparer. If your tax situation is complex, it might be worthwhile to get professional help to prepare your tax returns. A professional tax preparer can ensure you complete your tax returns correctly and claim the deductions and credits for which you are eligible. This can help you to save money.

While tax planning is not essential for everyone, it is worthwhile for many people. Many decisions you make about your finances could have a large impact on your taxes for years. Understanding the impacts your financial choices might cause can help you make better decisions that can also play a role in your overall financial planning.

Why the Assistance of Tax Professionals Is Beneficial

Tax professionals offer a substantial amount of knowledge about the tax laws and how they can impact both how much taxes you might owe and your overall financial picture. Taxes are complicated, and the federal tax code contains more than one million words. Most people do not have a good understanding of the U.S. tax system and the rules that you can use to save money.

Tax professionals can help to eliminate a lot of uncertainty. Even if you only work with a tax preparer, they can help you claim credits and deductions that you were not previously aware of. If you hire a tax planning professional, you might derive even greater tax benefits. A tax planning professional can help you understand how to plan for retirement, invest, and leverage charitable contributions for the greatest benefits. They can also help you understand how your financial goals might affect your tax situation.

Working with tax professionals also offers you some peace of mind. You won’t have to worry nearly as much if you are selected for an audit. A professional is less likely to make errors on your tax return.

Finally, tax professionals can help to optimize your financial plans. When you work with a tax planning professional, you might find that it is easier to make otherwise stressful financial choices and follow through with them because you will know what the likely outcomes will be.

Both tax preparation and tax planning can offer numerous benefits that you can benefit from. However, they are different services. Understanding your financial needs can help you determine which of these services you might need or possibly help you to determine that you might need both.

Contact TMD Accounting to Find an Accountant for My Small Business

If you want help with tax planning and tax preparation for either yourself or your small business, you should reach out to the professional accountants at TMD Accounting. We offer small business accounting services and individual tax planning services and can help you understand your tax situation and guide you toward reaching your financial goals while minimizing your tax burden. Call us today to schedule an appointment at 1-856-228-2205.

When it comes time to prepare your income tax returns, you need help from an accountant. Most business owners don’t have the time to file taxes or want to make a costly mistake. An accountant can sort through all those records, but they need a little help from you. You must bring the proper documents and forms to help your accountant during tax time. Here are some ways to prepare your tax records for your accountant.

What To Bring

Before you head over to your accountant, you need a few essential documents. First, you must bring identification information. These documents will prove your identity. You should bring your Social Security card and a photo ID. Along with that, take a copy of your most recent tax return.

In some cases, you might not qualify for the same write-offs or deductions as the previous year. However, these documents can help your accountant access certain information and calculate deductions. If you are working with a new accountant, your past tax return will allow them to discover any discrepancies between those previous tax returns.

Don’t forget about those wage statements. If you are an employee at a company, you should bring your employer’s W-2 wage and tax statement. Freelancers and independent contractors are considered non-employees. While they don’t receive the traditional W-2s, these workers often get a 1099-MISC from each client. You should send these forms to your accountant.

All dividend income from investment, unemployment, and Social Security income will need to be reported. You should have received a statement for those sources of revenue. Bring those documents to help your accountant.

Any real estate documents are essential. When it comes to real estate, there are many deductions. You should deliver all documents related to proof of paid mortgage, home equity loan interest, a recent home purchase, or paid personal property taxes to your accountant.

You want to get all those credits and deductions during tax time. Always have your proof of expenses. These documents include IRA contributions, invoices, medical bills, charitable contributions, self-employment expenses, mileage logs, and job hunting expenses. You would rather bring too much documentation to your accountant rather than miss critical pieces of information for tax time.

Common Business Records

There are plenty of tax documents you will want to bring for your accountant. First, you need all those financial statements for your business. These documents include balance sheets, cash flow records, and profit-loss reports. If you have employees, payroll information is another vital document for your accountant.

If you have any business expenses, take those records and hand them to your accountant. These expenses can include rent, utility, office supplies, telecommunication, internet, advertising, and travel costs. For those businesses that have vehicles, you will need to record all of the motor vehicle expenses, including driving logs and operating costs. You will need to keep track of asset additions and disposals involving machinery, buildings, and land.

Make the Process Easier for Your Accountant

When you use small business accounting services, you will want to make their job easier. In most cases, you pay the accountant by the hour. If they have to search for information, it could lead to frustration for all parties. Plus, it adds to your expenses. Here are a few ways you can help your accountant.

Speed Up the Process

With all of that information, documentation, and receipts on hand, your accountant will have an easier time with your tax returns. Remember that accountants are busy and work on several tax files during tax time. When you have all of your information, it can help them efficiently prepare and file your taxes.

Stay Organized

Whether you are a sole proprietor or operate a large company, you always need to stay organized. You should keep all receipts together. With the proper organization, your accountant does not have to spend time shifting through boxes of receipts. Those unsorted documents will increase your accountant’s time spent on your taxes.

Summarize Your Expenses

Consider providing your accountant with a summary of your records. All of your checks, business expenses, and invoices should be totaled and categorized. When everything is indexed, it will make your accountant’s job much easier for tax season.

Keep Personal and Business Expenses Separate

If you have several businesses, always separate each company’s revenue and expense documents. In addition to that, you never want to mix both your personal and business expenses together. Once again, if you do that, it will take time for your accountant to separate those expenses for your tax returns.

Don’t Wait Until Tax Time

When you work with an accountant, they can provide advice throughout the year. You do not have to wait to ask questions for the tax season. These professionals will be able to provide answers to your business questions. Plus, they can maximize your credit and deductions. In addition to that, they can analyze your financial health to plan for the future.

Come Prepared

Every year, filing tax returns can be complicated. Accountants know how to handle these tasks, but you can make their jobs easier by preparing the proper documentation. You can take the stress out of the season by staying organized when working with an accountant.

Final Thoughts

When you need an accountant for my small business, reach out to TMD Accounting. We have helped small and large companies for the past 40 years in Gloucester County. Our family-owned and -operated business can assist with your payroll, taxes, and bookkeeping services. Schedule your consultation by calling 1-856-228-2205.