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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.

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
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
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.

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

Nov
06

Tax Credits for College Students

Posted by mir

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.

Oct
07

Tax Breaks for Caregivers

Posted by bry

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.

Feb
01

Haiti Donations in Early 2010 OK For Claiming On 2009 Returns

Posted by Administrator

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.