Three steps charities applying for tax-exempt status need to take

Before applying for tax-exempt status, a charitable organization must determine whether it is a trust, corporation or association. After that, there are three additional steps to take:

1. Gather organization documents
Each application for exemption – except Form 1023-EZ – must be accompanied by an exact copy of the organization’s organizing document. This is generally one of these:

• Articles of incorporation for a corporation
• Articles of organization for a limited liability company
• Articles of association or constitution for an association
• Trust agreement or declaration of trust for a trust

Organizations that do not have an organizing document will not qualify for exempt status. If the organization’s name has been legally changed by an amendment to its organizing documents, they should also attach an exact copy of that amendment to the application.
State law generally determines whether an organization is properly created and establishes the requirements for organizing documents.


2. Determine state’s registration requirements
State government websites have useful information for tax-exempt organizations. They can find things including tax information, registration requirements for charities, and information for employers.


3. Get an employer ID number for the new organization
Organizations can apply for an EIN online, by fax, or by mail. International applicants may apply by phone. The instructions for Form SS-4, Application for Employer I.D. Number have additional details.
Third parties can receive an EIN on a client's behalf by completing the Third Party Designee section on the bottom of page 1. The third party must remember to get the client's signature on the form. This avoids having to file a Form 2848, Power of Attorney, or Form 8821,Tax Information Authorization, to get an EIN for their client.
It’s important that an organization doesn’t apply for an EIN until it is legally formed. Nearly all organizations are subject to automatic revocation of their tax-exempt status if they fail to file a required return or notice for three consecutive years. When an organization applies for an EIN, the IRS presumes the organization is legally formed and the clock starts running on this three-year period.

Special tax benefit for armed forces

Members of the military and their families are often eligible for certain tax breaks. For example, members of the armed forces don’t have to pay taxes on some types of income. Special rules could also lower the tax they owe or give them more time to file and pay taxes.

No matter what time of the year, it’s good for members of the military and their spouses to familiarize themselves with these benefits. Here are some things for these taxpayers to know about their taxes:

• Combat pay exclusion. If someone serves in a combat zone, part or even all of their combat pay is tax-free. This also applies to people working in an area outside a combat zone when the Department of Defense certifies that area is in direct support of military operations in a combat zone. There are limits to this exclusion for commissioned officers.
• Deadline extensions. Some members of the military, such as those who serve in a combat zone, can postpone most tax deadlines. Those who qualify can get automatic extensions of time to file and pay their taxes.
• Earned income tax credit. If those serving get nontaxable combat pay, they may choose to include it in their taxable income to increase the amount of EITC. That means they could owe less tax or get a larger refund.
• Signing joint returns. Normally, both spouses must sign a joint income tax return. If military service prevents that, one spouse may be able to sign for the other or get a power of attorney.

ROTC allowances. Some amounts paid to ROTC students in advanced training are not taxable. This applies to allowances for education and subsistence. Active duty ROTC pay is taxable. For instance, pay for summer advanced camp is 

Everything you need to know about bitcoin and your taxes

• It looks like 2018 will be a landmark year when it comes to the IRS and taxing cryptocurrency gains.
• The IRS treats cryptocurrency as property, so there are capital gain implications.
• The best way to minimize is to buy and hold for more than a year.

Bitcoin had its coming-out party in 2017. With all the excitement and opportunities around cryptcurrency, it might be easy to forget about crypto taxation. Almost every bitcoin or other "altcoin" transaction — mining, spending, trading, exchanging, air drops, etc. — will likely be a taxable event for U.S. tax purposes.

Without a doubt, 2018 will be a landmark year for Internal Revenue Service enforcement of cryptocurrency gains. Taxpayers should stay ahead of the game rather than be reactionary. The IRS is always more lenient with taxpayers who come forward on their own accord rather than those that get discovered. Coming forward now actually could be the difference between criminal penalties and simply paying interest.

With only several hundred people reporting their crypto gains each year since bitcoin's launch, the IRS suspects that many crypto users have been evading taxes by not reporting crypto transactions on their tax returns.

Unfortunately, the IRS has provided very little guidance with regard to bitcoin taxation. One thing, however, is clear: Although both the public and the crypto community refer to bitcoin and altcoins as virtual currencies, the IRS treats them as property for tax purposes. Therefore, selling, spending and even exchanging crypto for other tokens all likely have capital gain implications. Likewise, receiving it as compensation or by other means will be ordinary income.

While bitcoin receives most of the attention these days, it is only one of hundreds of cryptocurrencies. Everything discussed with regard to bitcoin taxation applies to all cryptocurrencies.

Let's look at specific crypto transactions and their tax implications:

• Trading cryptocurrencies produces capital gains or losses, with the latter being able to offset gains and reduce tax.
• Exchanging one token for another — for example, using Ethereum to purchase an altcoin — creates a taxable event. The token is treated as being sold, thus generating capital gains or losses.
• Receiving payments in crypto in exchange for products or services or as salary is treated as ordinary income at the fair market value of the coin at the time of receipt.
• Spending crypto is a tax event and may generate capital gains or losses, which can be short-term or long-term. For example, say you bought one coin for $100. If that coin was then worth $200 and you bought a $200 gift card, there is a $100 taxable gain. Depending on the holding period, it could be a short- or long-term capital gain subject to different rates.
• Converting a cryptocurrency to U.S. dollars or another currency at a gain is a taxable event, as it is treated as being sold, thus generating capital gains.
• Air drops are considered ordinary income on the day of the air drop. That value will become the basis of the coin. When it's sold, exchanged, etc., there will be a capital gain.
• Mining coins is considered ordinary income equal to the fair market value of the coin the day it was successfully mined.
• Initial coin offerings do not fall under the IRS's tax-free treatment for raising capital. Thus, they produce ordinary income to individuals and businesses alike.

Although specific identification of the particular coin being sold or exchanged would allow taxpayers to manage their short- and long-term capital gains, exchanges and wallets are currently not set up to choose which coins to sell or exchange. Therefore, the IRS will likely default to First-In-First-Out treatment, although no guidance has been provided, so taxpayers are allowed to pick their methodology as long as it is consistent throughout the return.

That being said, the best way to minimize is to buy and hold for more than a year. Short-term capital gains are taxed at your normal ordinary income tax rate while long-term gains are taxed at a reduced rate (15 percent to 23.8 percent, depending on your bracket). Of course, given the volatility, it still might be in your best interest to lock in the profit now and take the tax hit, but that is up to you to decide.

Digital exchanges are not broker-regulated by the IRS, which makes matters more complicated for preparing tax documents if you traded cryptocurrency. Exchanges do not issue a 1099 form, nor do they calculate gains or cost basis for the trader. Many don't even allow transacting in dollars, instead opting for Ethereum. This means that self-reporting is necessary.

Exchanges are starting to take note of tax reporting, however. Coinbase, for example, now provides a Form 1099-K, but only to certain business users and GDAX users who have received at least $20,000 cash for sales of cryptocurrency related to at least 200 transactions in a calendar year.

Other users need to use their account transaction history. The reporting of gains/losses and cost basis is still in beta and not guaranteed to be accurate. Therefore, we strongly recommend keeping detailed records of all crypto transactions at all exchanges in order to have all the crypto information needed for your U.S. tax return. Those records include dates of earning, buying or exchanging coins, market value at that date to calculate cost basis and the date and sales proceeds when a coin is sold, exchanged or spent.

Fortunately, there are some services available that can take your trading history and provide you with a fairly clean output for Schedule D on your tax return. Many investors have used bitcoin.tax and cointracking.info, for example.

Source 

CNBC