Everyone wants to have lesser taxes charged on their income and commodities bought. If you haven’t been informed, there exist tax exemptions for qualifying individuals and organizations too.
As long as they comply with certain requirements set by the IRS, exemptions can be kept. Discussed below are some of the situations that let you claim tax exemptions.
Charitable and religious organizations can be fully exempted from paying taxes. Any place of worship is considered under the label churches, regardless of religion.
As long as they fulfill the requirements set by the IRS, they can continue operation without worrying about taxes. Similar institutions should register under a 501(c)(3) tax-exempt status. This status also makes contributions from donors tax-deductible.
Organizations providing educational services like schools can file for tax exemptions. Museums and zoos can also be counted since they’re informative and promote learning to visitors.
These organizations should provide proof to the IRS regarding the educational activities they offer. It might be thru lectures, tours or seminars, as long as the information disseminated is valid and factual.
Social welfare organizations
Under section 501(c)(4) of the Internal Revenue Code, organizations that contribute to the well-being of a community can be exempted from federal taxes.
The IRS provides some examples of social welfare organizations in their website. For example, an organization that tries to encourage industrial development and relieve unemployment in an area. Another example is one that holds an annual festival of regional customs and traditions.
Agricultural and horticultural organizations
Organizations that promote the interests of individuals engaged in raising livestock, harvesting crops or aquatic resources, and cultivating useful or ornamental plants can be counted for tax exemptions. They dwell in informing interested citizens of the scientific methods on land cultivation and animal husbandry.
Some of the activities these organizations provide are: (1) guarding the purity of a specific breed of livestock; (2) encouraging improvements in the production of fish on privately-owned fish farms, and; (3) negotiating with processors for the price to be paid to members for, but not acting as an agent to help members sell, their crops.
Unions and associations of workers that protect or promote their interests are counted under this type of organization. Their primary purpose is negotiation with their employers to secure better working conditions and wages.
To maintain the status, the IRS requires qualifying organizations to submit documents providing information of their purpose. It should have aims of better establishing the conditions of workers, improving the grade of their products, and developing a higher degree of efficiency in their respective occupations. In addition, no net earnings of the organization may benefit any member.
Personal tax exemptions
Reduce your taxable income by filing for personal exemptions. There are so-called spouse exemptions and dependent exemption you can tap to reduce taxes. As of 2012, the exemption can reach up to $3,800, regardless of your income.
If you and your spouse are filing separate returns, you can claim an exemption for your spouse only if you meet all these prerequisites: (1) your spouse has no gross income, (2) your spouse is not filing a return, and; (3) your spouse isn’t another taxpayer’s dependent.
You can also claim an exception for each person you count as your dependent. You can count your child or a relative as dependents if they pass all the qualifications set by the IRS.