Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

This is a tough one. For 10 years I have been helping my

Customer Question
This is a tough one...
This is a tough one. For 10 years I have been helping my friend in Kenya with her orphanage. I know her very well and know her orphanage is legit. I sponsored three kids to go to school. My church society also sponsors a girl and then a woman (unsolicited) wanted to donate $10,000. I deposited it in the separate account I have and my bank called and said I should get a TAX id #., which I did. Now I think I have to file something, but this is just a a few people helping my friend. I don't want to have a 501 c3 or anything like that. I just don't know what to do. ALL the money goes to help the kids in Kenya at one orphanage. No one gets paid anything and I donate my own money to send mail, etc. I called IRS and they suggested a 990EZ but that is for Return of Organizations exempt from Income Tax. I don't think I quality for this. Maybe I should just withdraw the money from that Shepherd's Home fund account and close the Tax ID? number. The more I read, the more confused I am. Thanks for helping. Pam Broiles, Wells, NY
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: I do not solicite donations or hold fundraisers and all money sent to Kenya has a big paper trail.
Submitted: 7 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 3 hours by:
4/18/2017
Tax Professional: Shan-Nel Simmons, Enrolled Agent replied 7 months ago
Shan-Nel Simmons
Shan-Nel Simmons, Enrolled Agent
Category: Tax
Satisfied Customers: 24
Experience: Tax Pro and Founder at Nel's Tax Help,LLC
Verified

First, that is very nice of you to help the orphans in Kenya.

So, your friend, not you, is helping with the orphanage. You are merely gifting your friend money. But you could be subject to gift taxes. For the annual limit you can send to anyone as a gift for 2016 and 2017 is $14,000 per year. So if you only sent $10,000 a year, you are fine. It is a gift and it's under the limit.

Now, you cannot deduct this $10,000 if it is truly a gift. Since the organization is in Kenya, if it is a charity and you would want to treat it as a charitable donation, one would have to research if the US has a treaty established with Kenya.

So as long as it's a gift and you did not exceed $14,000 for the entire year, you will not have to worry about reporting it as income but cannot claim it as a deduction.

I do think the IRS misunderstood you and probably thought you were running the organization. It seems like you are merely a person gifting the orphanage.

But again, be careful about possible gift taxes.

Ask Your Own Tax Question
Tax Professional: Shan-Nel Simmons, Enrolled Agent replied 7 months ago

Glad to help. Please leave a five star rating.

Ask Your Own Tax Question
Customer reply replied 7 months ago
Hi Shan-Nel, Thank you for your response. I originally had the Shepherds Children's Fund under my SS number and then when the kind lady donated $10,000 (apparently, she sold three senior citizen homes in Long Island)....my bank called and said I should get a Taxpayer ID number and then changed the titling of account. Although the" business "line of the form when I opened the account says "volunteer group". I have copies of her licensing as an orphanage from Kenya and she is the ONLY one I send the money too. It's used for food, improvements and about five of us sponsor a student to go to a boarding school. This $10,000 was used for installing a Posho Mill so she can make some money grinding flour. Last year I used my own money to help install electricity in the compound, so they don't have to use kerosene lamps. I never intended this to be some kind of big non profit organization though.
Any way, I was researching more yesterday and saw that I can make a request to have the EIN deemed "out of service" so to speak with an explanation . Maybe I will do that and just keep the separate account under my own SS number?
This was just an extraordinary thing and generally I have about $200/$300 dollars in that account. Friends may give me $50.00 here or there when the kids are home from school or if I have mentioned a special need. Sorry for rambling on. So do you think this may be the way to go.? Thanks for getting back. Pam Broiles
Tax Professional: Shan-Nel Simmons, Enrolled Agent replied 7 months ago

I found this advice from this website about giving money only to foreign charitable activity: https://www.501c3.org/charitable-activities-in-a-foreign-country/

Charitable giving. This activity usually involves a US charity financially supporting the efforts of a foreign charitable organization. This topic may seem more straight-forward on the surface, but it is actually treated with greater scrutiny by the IRS than are direct activities. For example, a US charity gives money to a poverty relief program based in New Delhi, India. In principle, this is OK, so long as the foreign country or agency is not on any OFAC list (see above). The problem is the lack of direct, fiduciary responsibility for the expenditure of funds by the US organization. In our example, the US charity must ensure that the program being supported qualifies as one that would be recognized as 501(c)(3) if it were in the US. In addition, the US charity must require a detailed accounting of the expenditure of funds in order to monitor compliance with 501(c)(3) related expenditures. Should the domestic organization find out that money is not being spent in a way that would be acceptable by the IRS, the donations to that foreign organization must cease immediately.

Also, the IRS will not allow a domestic charity to be simply a “money conduit” to a foreign organization. US law does not allow such direct-affiliate organizations. In other words, a US charity cannot exist for the sole purpose of financially supporting a specific foreign charity. A US charity must be organized for specific charitable purposes that it alone is responsible for, one of which may be the support of foreign charitable work. It is best when that support is not tied to any specific foreign charity on an exclusive basis. For a new organization it is OK to name the foreign charities to be supported initially, but it would be a big mistake to make the support of those named charities the sole purpose. The IRS would probably deny the application for 501(c)(3) status. Revenue rulings 63-252 and 66-79 deal with some of these issues directly.

My advice to you at this time is seek legal aid or an attorney as your issue goes beyond what can be done here.

Glad to have you this far. Please leave a five star rating. Enjoy the rest of your day!

Ask Your Own Tax Question
Ask Shan-Nel Simmons Your Own Question
Shan-Nel Simmons
Shan-Nel Simmons
Shan-Nel Simmons, Enrolled Agent
Category: Tax
Satisfied Customers: 24
24 Satisfied Customers
Experience: Tax Pro and Founder at Nel's Tax Help,LLC

Shan-Nel Simmons is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
My client is a foreign corp in Slovakia with no PE in the US
My client is a foreign corp in Slovakia with no PE in the US and does not want a US subsidiary but would like to hire 2 US persons - what is the best way to do that? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Are you familiar with income tax laws on business and
Are you familiar with income tax laws on business and personal returns? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Form 1120, cash basis. If Taxes paid to IRS are deductible,
Form 1120, cash basis. If Taxes paid to IRS are deductible, are refunds for overpayment the equivalent of income?… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
Question for a Tax Attorny who Knows US tax Laws regarding
Question for a Tax Attorny who Knows US tax Laws regarding Foreign Companies ? My company is a Cayman Company (#1) (Foreign) owned by USA Citizens (2). Company (#1) filed IRS Form 8832 to be Taxed as … read more
taxmanrog
taxmanrog
Master\u0027s Degree
697 satisfied customers
Information on Gift tax return. My 100 year old mother wants
my 100 year old mother wants to gift the balance of a home loan to my brother, Balance is aprrox $35,000. What are the mechanics? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
How do I report an in-kind donation of business services to
how do I report an in-kind donation of business services to a non-profit on my 1120S return? I donated business time and my programmer's time developing a piece of software and supporting it. Do I nee… read more
taxmanrog
taxmanrog
Master\u0027s Degree
697 satisfied customers
Sure. I'm electing to deduct foreign taxes paid in 2016 due
I'm electing to deduct foreign taxes paid in 2016 due to limitations on the credit usage. I have a credit carryover from 2015 as well. Since the carryover is from earlier years, can I use some of the carryover and the current year foreign tax deduction on the same 2016 tax return? … read more
Anne
Anne
Master Tax Preparer
1,328 satisfied customers
Client (US resident) with foreign salary and taxes paid in
Client (US resident) with foreign salary and taxes paid in foreign currency - Part II of 1116 form for some reason adds taxes paid only in US $ (line "o" through "r") - it does not take taxes paid in … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Would it be correct to report a foreign cash inheritance as
would it be correct to report a foreign cash inheritance as an initial and final on form 3520? bequest, no trust, will require FBAR now and for some years but the 3520 is mny concern … read more
abci168
abci168
Principal
27 satisfied customers
What tax form is filed to report dividends paid by US Corp?
What tax form is filed to report dividends paid by a US Corp which is owned by a Canadian Corp? I think it might be 1042S. I want to know the rate of WH.… read more
abci168
abci168
Principal
27 satisfied customers
On a Partnership K-1, foreign income items are reported on
On a Partnership K-1, foreign income items are reported on Line 16, but in addition there is a separate schedule listing foreign currency gain, Subpart F income and qualified fund income under Sec 129… read more
abci168
abci168
Principal
27 satisfied customers
If a charitable organization offers a lifetime membership,
If a charitable organization offers a lifetime membership, which would otherwise not be deductible because related current and future tangible benefits approximate the cost, is any part of the members… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Foreign Income - I have a new taxpayer client. * She is a US
Foreign Income -I have a new taxpayer client. * She is a US citizen. * Was married in Austria and still married to the Austrian. * Marriage is not recognized in the US. * Has rental house in US, no ea… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
My question involves immigration law and tax law. Foreigner
My question involves immigration law and tax law.Foreigner comes to USA, becomes permanent resident. Had assets from before. I was told if you bring up to 100k USD per year to the USA, IRS doesn't min… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
The $14,000 gift tax exemption per person - can the gifts
The $14,000 gift tax exemption per person - can the gifts only be transferred to spouses and children or can it be given to son-in-law?… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Foreign earned income tax exemptions. My husband started
foreign earned income tax exemptions. My husband started working in the UAE in February 4, 2017. How many days is he allowed to physically visit the USA in a 12 month period to be qualified for the ex… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Can tuition for catholic high school be reported on the form
Can tuition for catholic high school be reported on the form 3561? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x