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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.

Nov
08

The IRS Wants a Piece of the Virtual Pie

Posted by bry under General

Have you ever bought something on Craigslist or Ebay?  Have you ever sold something on Craigslist or Ebay?  Have you ever traded something on Craigslist?  If you answered yes, you are just one of 50 million Americans.  Have you ever asked yourself how that affects the way you report your taxes?

Even if you haven’t asked yourself that, you can bet the IRS has asked that.  With more and more people turning to the internet to make money, the government continues to look at ways to collect taxes from such transactions.

Now, if you are the kind that just uses these sites as a glorified garage sale center, then you have nothing to worry about.  However, if you have become a reseller to an extent that your income is substantially augmented with online sales, you should probably look into filing forms like the new 1099-K.

Also, if you are the kind that likes to barter via these sites, you should report the goods or service that you receive as income.  The other side of that is that you might be able to report whatever good or service you offered to the other person as a deductible.

As with all things, it pays to do a little homework.

Nov
06

Tax Credits for College Students

Posted by mir under Tax Credits

College Tax Credits

We all know the economy stinks right now.  Because of that, a lot of adults are finding themselves back at college again to get the degree they never finished or get an advanced degree to add to their resume.  The government has seen this trend and has instituted some tax credits for college students.  There are two main credits to look for.

The Hope Credit is tax credit for students attending their first two years of school.  It can provide you with a tax credit of up to $1,800 on college tuition and fees.  If you, your spouse or someone you claim as a dependent is a first or second year college student,  is attending half time or more at a qualifying institution, and all college expenses were paid by you,  you can claim the Hope Credit when you file your taxes.

The Hope Credit is available to those with higher incomes and it allows you to claim additional course materials as expenses for up to four post-secondary education years instead of the traditional two.  The maximum credit of $2,500 per year per student is fairly easy to qualify for.  You can claim a full credit if you have an adjusted gross income of $80,000 or less as a single, or $160,000 or less for married couples with a joint return.

The Lifetime Learning Credit is a tax credit for anybody taking college classes.  You can get a tax credit of up to $2,000 on tuition and fees up to $10,000.  If you, a dependent or your spouse attended a qualified institution, and you paid for all the expenses, you can apply for this credit.  This tax credit does not require you to attend at least half time.  As long as you took at least one credit, you may qualify.

So, if you attended college this past year and you feel like you meet the requirements, apply for the credit and you just might be surprised when you get back some unexpected money.

Nov
02

Marital property and Non-Marital Property in Divorce

Posted by Administrator under General

Once divorce proceedings start, a lot of unfamiliar legal terms start getting thrown around.  One of the most important distinctions when dividing the finances between a divorcing couple is the difference between marital and non-marital property.

Marital Property is considered to be co-owned by both parties, and must be split between the two parties of the divorce.

Non–Marital Property is considered to be individually owned by a particular spouse, and remains wholly the property of that spouse after the divorce.

It is not uncommon for a lay person to make certain assumptions about what is and isn’t marital property that can actually be completely incorrect. Just because you owned the car or house before you were married, does not necessarily make it non-marital property.  A lot of factors can influence this determination, like the length of the marriage, and different state laws. For example, in a state with a community property law, as soon as you are married, everything you own becomes your spouse’s by 50 percent, with very few exceptions.

Essentially, the person who makes the final distinction between marital and non-marital property in a divorce is the judge. Which leads to the questions, how does the law make these distinctions? The answer is: a LOT of different ways-entire books are written about this. What is important for you to know is that you cannot assume that just because you bought the property before you were married, or you started the business before you were married, that it is considered non-marital property. You have to have a judge tell you if is marital or non-marital (If the couple can agree with their attorneys about what the case may be, this becomes a moot point).

Oct
27

Tax Deductions You Don’t Know About

Posted by mir under General

Most of us know the regular tax deductions we can submit every year, but there are a handful of deductions most people don’t know about.  I want to share a few of these strange and unusual tax deductions with you.  Did you know you can deduct the cost of moving your pet to a new home?  Apparently your pet is considered a personal affect and you can write off the cost of transportation to Uncle Sam.

One that I found kind of gross is being able to write off the use of body oil.  Apparently, this only works if you can prove you’re a professional body builder.  On that note, one lady was able to deduct the cost of her breast augmentation  because it was considered a “stage prop essential to her act.”  As you might guess, this lady was a stripper and apparently it helped her get better tips.

One that I thought was actually good was the ability for a mother to deduct the cost of a babysitter when she’s doing volunteer work for a charity.  It might not be a crazy girls’ night out, but at least the government will pick up some of the tab.  Last but not least, if you own a junkyard and have a problem with rodents or snakes, you can deduct the cost of cat food to attract cats to help with your vermin problem.  Who knew?!

Oct
20

2010 Tax Bracket Breakdown

Posted by Administrator under General

Currently the United States uses a graduated income tax method, which, in its simplest terms, means that the more money you make the greater percent of it you will pay in taxes. It’s always a good idea to be aware of which tax bracket you fall into based on your income.  (And it’s also kind of a fun thing to know about those pesky neighbors the Jones.’)

For those couples who are married filing jointly, it can be very important to consider before deciding if both spouses will work full time.  If the difference in added income moves you to a higher tax bracket, once you combine it with child care costs etc, the second income can be entirely consumed by exterior and unanticipated costs.  So, for those who need to know, and those who just like to know, the following is the breakdown for how much of your income will be due as taxes, as of 2010.

Tax Rate Single Filers Married Filing Jointly Married Filing Separately Head of Household
10 % Up to 8,375 Up to 16,750 Up to 8,375 Up to  11,950
15 % 8, 376 – 34,000 16,751 – 68,000 8, 376 – 34,000 11,951- 45,550
25 % 34,001 – 82,400 68,001- 137,300 34,001 – 68,650 45,551 – 117,650
28 % 82, 401 – 171,850 137,301 – 209,250 68,651 – 104,625 117,651 – 190,550
33 % 171,851 – 373,650 209,251 – 373, 650 104,626- 186,825 190,551 – 373,650
35 % 373,651 or More 373,651 or More 186,826 or More 373,651 or More
Oct
07

Tax Breaks for Caregivers

Posted by bry under Tax Deductions

Do you know someone who is taking care of an aging parent?  As the baby-boomer generation reaches the elder years, more and more are transitioning from being income earners to being dependents.  Many of them are taken care of by their children or grandchildren.  This can put a huge strain on the children/grandchildren, both emotionally and financially.

There is some hope for caregivers.  There are some provisions in the tax code for such circumstances.  Perhaps the most commonly recognized is the federal income tax dependent exemption.

The purpose of an exemption is to reduce your taxable income.  This exemption can be taken for yourself and for your spouse if you are married.  This particular exemption can be worth as much as $3,650.

The cost of giving full-time care to a loved one can easily become burdensome.  Take advantage of every exemption available if you are a caregiver.

Oct
02

Filing Taxes the Year of a Divorce

Posted by mir under General

Divorce Tax Tips

Taxes are bad enough, and so is going through a divorce, but put the two together and you’ve got a huge mess.  If you are currently facing these two issues, here are a few hints that might help along the way.

  1. First and foremost, the day your divorce is finalized is very important.  If your divorce is finalized by no later than December 31 of that year, the IRS will consider you unmarried for the entire year.  Knowing this may help you plan the best day for your divorce finalization.
  2. If you were not yet divorced in the year you’re filing for, you can still file jointly.  You and your partner should probably decide if it’s best to file as “married,” “married filing separately,” or “married filing jointly.” You can run the numbers to see which one would give you both the best return.
  3. Be aware that taxes play a large role in how your property is distributed. The IRS decides how property distribution, child support and alimony are reported.
  4. Alimony is considered taxable income for the recipient and it is tax-deductible for the giver.  Child support, however, is not taxable income for the recipient and it is not tax-deductible for the giver.
  5. The IRS assumes that the parent with custody of the children is allowed to claim exemptions for those children.  However, spouses can trade them back and forth if desired using IRS Form 8332.
  6. Before you do anything, seek out professional help to make sure you don’t get burned.
Feb
01

Haiti Donations in Early 2010 OK For Claiming On 2009 Returns

Posted by Administrator under Featured

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.

Jan
05

Six Tax Tips for 2010

Posted by Administrator under Tips

Tax season is here and it falls upon you, the responsible citizen, to make sure you are square with Uncle Sam. For most people, it means getting a refund, but for some, it is time to pay the piper the taxes they have been setting aside for the past year.

Here are six tax tips that can help you either get your refund faster or square up and minimize what you owe:

  1. Hunt down your W-2s and 1099s. Your employer is required by law to get your W-2 form to you in a timely manner. For contract work for businesses, your client is required to give you a 1099 form showing what they paid you in the past year. You can’t even get past the first step of filing your taxes without these forms.
  2. Gather your records and receipts. Assuming you have not been very organized with your records throughout the year, get started on sorting and organizing right now. Waiting until April to start this step is just asking for trouble.
  3. Check the irs.gov website for updates. Tax laws change pretty fast and you will need to be able to stay on top of what’s new.  For instance, this year, it is OK to make charitable donations to Haiti and claim it on your 2009 return.
  4. Use electronic filing, or e-file. The days of manually filling out tax forms with a pen are long gone. Get yoiur taxes done on your computer for free or for very little. Don’t have a computer? You can borrow one from a friend or rent one at an internet cafe for the hour or so it takes to enter your tax data and send it to the IRS. This also speeds up your return immensely.
  5. Review your work. You have plenty of time. Yes, you want your refund ASAP, but if you spend a little extra time now, double-checking your work and making sure you are getting every deduction you qualify for, you can save hundreds of dollars.
  6. Be calm. There are many free resources available to help you. Even if that is not enough, you can choose to use a tax preparer, but remember, the closer it gets to April 15, the harder it is to find an available CPA.

This is definitely one aspect of American life when procrastination definitely does not pay off. Make sure you remain calm but focused and try to use a computer when filing your taxes to have a better tax reconciliation experience this year.

Dec
26

Choosing Someone to Prepare Your Taxes For You

Posted by Administrator under Tips

Nowadays, EVERYone wants to prepare your taxes for you. You see temporary kiosks in Wal-Marts, malls and just about any other large area where people shop. There are also Certified Public Accountants or CPAs that want you to hire them to organize your finances and pay your taxes for you. Websites bombard you with ads to buy or use their tax preparation software.

It helps to know what you are getting into and what to avoid. Here are some tips to help you make sure you aren’t a victim this tax season.

  • Check qualifications. Use your smart phone or wait and go home to look up the company name of the tax preparer you may be interested in. Find the small print on their website and read it. Also do searches online to see what other people are saying about them.
  • Find out what the real cost is. Sometimes fees are not mentioned at the beginning of the sale. These are known as hidden fees. Smoke them out!
  • Make sure you will be able to contact your tax preparer later on in case you have a problem, a question, or you are getting audited by the IRS. If you sign your info over to a tranger at a mall, how do you know you will be able to find that person again when their kiosk is gone in mid April?
  • Never sign a blank form. Some tax return preparers do not have your best interest in mind. Signing a blank return means that you are responsible for whatever they add to that signed form. This is just like signing something without reading it or handing a signed blank check to a stranger. Just don’t do it.
  • Make sure the tax preparer signs the form in front of you. They need to sign by law, so if they make a mistake and turn in your return without signing it themselves, your tax refund will be held up until the issue is resolved, which could take a very long time.

Aside from these tips, common sense will help you avoid pitfalls and help youget your refund faster. Remember that the info we provide to the IRS each year is very sensitive peronal information. Be sure you can trust the people you are signing this information over to.