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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 January, 2011

Jan
13

Big Tax Savings for Business Owners!

Posted by Administrator

One of the lesser known tax law changes for 2011 has to deal with writing-off personal property in a business.  Most business expensing or write-offs are handled via section 179, but for the tax year of 2011 only, some fairly big changes have occurred that are handled outside of section 179, and don’t have the same eligibility requirements.

Essentially, any business owner is eligible to write off the entire value of personal property purchased for the business after September 8th, 2010.  The new law changes allow 100% bonus depreciation in the first year of purchase (rather than graduated depreciation over a period of five years).  For example, if you purchase a $2,000 computer for your business in Sept-Dec of 2010 or in 2011, you can deduct the entire $2,000 from your total taxable income. Depending on your tax bracket, this will result  savings of $200-700, just on that one computer. (See What Does it Mean to “Write Something Off”)

This fabulous windfall continues throughout 2011, so if you haven’t purchased property already, there is never going to be a better time than now to do so! If you are thinking about investing in property plant equipment and furniture and fixtures for your business, this news is for you!

Jan
13

Do you Have to Pay Taxes on Gifts?

Posted by mir

Is ths taxable?

Many of us received Christmas gifts from friends or family members this year.  Chances are, we also gave gifts to lots of people as well.  Hopefully everyone got what they wanted and were maybe even pleasantly surprised with some of them.  Is that the end of the story?  Unfortunately, it may not be.  Did you know you’re supposed to pay taxes on gifts?  How crazy is that?  When I heard this I realized I am certainly not the only one not abiding by this relatively unknown tax law.  For any of you, like me, who had no idea this law existed, let me fill you in on some of the details.

The first question to answer is who is responsible for paying the gift tax.  In general, the giver of the gift is responsible for paying the gift tax.  However, in rare circumstances, the receiver may pay the tax.  A decision like this would require consultation from a tax professional.

The second question to answer is what items qualify as a gift.  To put it in simple terms, any direct or indirect transfer to an individual where nothing is received in return.  This can be measured in monetary terms or by how much the money is worth.

The third question is whether or not certain gifts can be excluded from being charged a gift tax.  Generally, any gift can be taxable, but there are some exceptions.  Any gift that is less than the yearly exclusion for the calendar year may be considered exempt. Medical expenses or tuition you pay on behalf of someone else, or gifts you give to your spouse can also be excluded from taxation.  Last but not least, some gifts given to a political campaign or certain charities are also gifts you can avoid paying taxes on.  These are of course general guidelines, but make sure you speak with a tax professional to ensure you file correctly.

Jan
04

Don’t Miss These Tax Deductions

Posted by mir

I don’t know a whole lot about doing taxes but I do know that deductions are good things that help you get more money back.  You hear about rich people writing off their trips or new laptops for business purposes, but what about us regular people?  I found a few deductions regular people like me can take advantage of.  The first is out-of-pocket charitable contributions.  Many of us keep track of big things we donate, but what about the little things like ingredients you buy for a nonprofit bake sale?  Maybe you purchased stamps for a school fundraiser.  Both things are totally tax deductible.  You can also deduct $.14 a mile for any driving you did for a charity or nonprofit organization. If your total contributions are more than $250, you will need the charity to acknowledge the validity of the expenses.

I you are one of the many looking for a job right now, you can deduct some miscellaneous expenses you incur while job hunting.  You can’t get these deductions if you are looking for your first job, and you can’t go over 2% of your adjusted gross income.  That being said, you can deduct things like lodging, food and transportation if you are required to be away from home overnight.  You can also deduct cab or taxi fares and fees you pay at employment agencies.  Last but not least, you can deduct what you pay for printing resumes or any other paper product you need in applying for jobs.

If you are just at the beginning of your career, you can deduct the expenses of moving to take your first job.  This job needs to be a minimum of 50 miles away from your current residence.  If this is true, you can deduct the cost moving you and all your possessions to the new location and even get 16 1/2 cents for each mile you drove your own car for the move in 2010.

In an effort to save money, some of us have started to make changes to our homes to make them run more efficiently.  You can get a tax credit for 30% of the cost of the improvements you do up to $1,500.  If you already claimed the full $1,500 in 2009, you can’t claim it again in 2010.  This credit works for windows and outside doors, high efficiency furnaces, air conditioners, water heaters, and stoves that use biomass fuel.  If you installed alternative energy equipment at your residence, there is no dollar limit you can apply the 30% to, and you can even include the cost of labor.  Just one more way going green can help you save green as well!

Jan
03

Military Tax Perks

Posted by mir

For those people who are serving in the U.S. military, there are some tax perks that you should be taking advantage of.  Here is a list of some of these well deserved perks:

Military personnel, as well as some other federal employees serving outside the country, have an extra year to qualify for a home buyer credit. U.S. taxpayers that are eligible for this credit need to sign a binding contract to buy a personal residence no later than April 30, 2011.

If you are out of the country on the deadline to file taxes, you are allowed an extra two months to file your return and pay what you owe without having to request an extension.  You qualify for this if you live outside the U.S. or Puerto Rico, and if your workplace is also outside of the U.S. or Puerto Rico.  You are also eligible if you are in the navy or military outside the U.S. or Puerto Rico.

If you belong to the U.S. Armed Forces and serve in a combat zone, you can exclude portions of pay from your income. Enlisted personnel, warrant officers, and commissioned warrant officers can exclude active duty pay earned in any month served in a combat zone, or hostile fire/imminent danger pay.

Members of the National Guard and Reserve can deduct travel expenses for overnight service trips 100 miles or more away from their home.


Jan
01

A Year-long Gift from the U.S. Government

Posted by bry

As part of the tax bill signed by the President last month, quite a large number of American taxpayers will see a discount on their payroll taxes.  Social Security taxes are usually 6.2 percent of an employee’s wages, up to $106,800.  Thanks to President Obama and the bill, in 2011, employees are only liable for a 4.2 percent contribution toward Social Security, rather than the 6.2 percent.  This should be a relief on most taxpayers, at least for the short term.

For the self-employed this break will not affect the employer contribution to Social Security.  This means you will still be liable for a 6.2 percent employer contribution.  You would still qualify for the employee discount of 4.2 percent.  Your combined contribution would drop from 12.4 percent to 10.4 percent.

Turning this short-term relief into a long-term benefit is up to the taxpayer.  Think about putting that money into your mortgage principal, retirement, or to pay-down those student loans that have been haunting you.