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Haiti Donations in Early 2010 OK For Claiming On 2009 Returns

Posted by Administrator on Feb-1-2010

The IRS announced a new tax relief for people who contributed to providing earthquake relief in Haiti. It allows contributors to get the tax advantage of the donation for their 2009 claim rather than waiting a year for the benefit.

According to the irs.gov website, only cash contributions made after January 11, 2010 and before March 1, 2010 will qualify. All cash donations made after March 1, 2010 will only be eligible to be claimed for the 2010 tax year.

To gain the benefit, you must itemize your tax deductions using Schedule A. For more information, please visit the IRS website at irs.gov.

Archive for December, 2010

Dec
22

U.S. Taxes Compared to Other Countries

Posted by mir

Taxes Around the World

Many of us Americans complain about the high taxes we have to pay to the government.  But how bad off are we really compared to the rest of the world?  I did some research and found out things are not too bad here in the U.S.  People in Belgium pay between 25-50% to income taxes.  Japan imposes income taxes up to 50%, Netherlands charges up to 52%, but that’s still not the worst.  The highest personal income tax charged comes to 59% in the great country of Denmark. Wow, that is just crazy!

One thing that is found in common among most developed countries is the percentage of taxes paid by the wealthy.  In a recent study, it was found that the top 10% of income earners in the U.S. pay over 70% of the taxes.  At the same time, the bottom 50% of taxpayers pay only 2.89% of all income taxes.  This being said, many of the wealthy get around paying taxes.  Many people call this the Robin Hood routine where the government “steals” from the rich to feed the poor.

Although this may seem disproportionate for the high income earners, there doesn’t seem to be a better way to do thing, especially in times like the current recession.  There is simply no other place to get money from.  So, what is the moral of the story?  As a whole, U.S. taxes are not too bad, be prepared to pay more taxes if you make more money and make sure you’re informed on the best way to handle your income taxes no matter what tax bracket you’re in.

Dec
12

Filing Taxes for Dummies

Posted by mir

For many of us, the task of filing your taxes is a daunting and scary one.  I for one really dislike everything that goes into filing taxes and do whatever I can to make the process go as smoothly as possible.  For other people out there like me, there are two different routes you could take.  One is to hire someone to do all the work and hope they do it right, or find an easy to use program that will help you file taxes on your own.

If you choose to hire someone, make sure they will pay all penalties and interest to the IRS for any mistakes they make.  I would recommend you use a referral from a friend or colleague.  At least that way you’d have some personal reference regarding their quality and integrity.

If you are brave and want to do it on your own, find reliable tax software that will take you step by step through the process.  Make sure to use all the free online resources available, including the IRS website, free tax calculators, retirement calculators and 401(k) calculators.  If you take your time and do your homework, tax season will be a breeze.

Dec
10

What does it mean to “Write Something Off?”

Posted by Administrator

This is probably one of the most common tax terms that the average Joe will fling about casually with out really knowing what they’re talking about.  How often have you heard someone say “oh, I’ll just write this off” and nodded knowingly pretending you actually understand what that means? Perhaps you have even used the term yourself, or smiled and pretended to ‘get it’ when someone informs you that being able to “write it off” makes a decision more financially favorable.

Clearly I am not saying that everyone who uses this term doesn’t know what they are talking about.  But obviously you yourself have some questions because you are reading this blog, the title of which clearly indicates its content.  So here’s the 4-1-1. (A term meaning an informational breakdown of the facts).

A write-off is the same thing as a deduction. A deduction is a certain dollar amount that you are subtracting (or ‘deducting’) from your total taxable income. By doing this you decrease the amount of your taxable income (without affecting your actual income in any way) you have to pay less taxes.  For example, if you make 50K gross a year, and so fall into the 25% bracket, you will owe $12,500 in income taxes, which your employer will withhold from your paycheck.  A $500 deduction means that you will only be taxed on 49,500 of what you made, for a total of $12,375.  A $500 deduction will save you $125 in taxes. ($500 multiplied by whatever your tax bracket tax rate is).

Now that you know exactly what a write-off is, make sure you look into the list below.  All of these are things that you are eligible to write-off, or deduct, so make sure that you, or whoever is doing your taxes, is saving you as much money as possible.

Business expenses

Depreciation Expense on capital equipment (furniture, fixtures etc)

Personal Property Taxes

Interest on your Home Mortgage

Charitable Contributions

Medical Expenses

Tax Preparation Fees