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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
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
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.

Nov
23

Basic Tax Terms to Know

Posted by mir

As we prepare our taxes, we come across several terms that may or may not be familiar to us.  In lieu of this, I thought it might be helpful to provide definitions of these terms to hopefully decrease some confusion.  Listed below are some of the most common terms and their accompanying definitions:

Adjusted Gross Income (AGI): Gross income that is reduced by certain amounts, such as a student loan interest, or deductible IRA contribution.

Dependent: A person, other than the taxpayer or husband/wife, who allows the taxpayer to claim a dependency exemption.

Earned Income: This includes salaries, wages, tips, included in gross income, and net earnings that come from self-employment earnings.

Gross Income: Goods, services, money and property a person receives that is required to be reported on a tax return. This includes unemployment compensation and some scholarships, but not welfare benefits and nontaxable Social Security benefits.

Tax Credit: A reduction in tax that is paid out dollar for dollar. This can be directly deducted from taxes owed.

Tax Deduction: An amount that reduces the taxable income. This is usually a personal or business expense.

Tax Exemption: A portion of a person’s income that is not taxed.

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
02

Filing Taxes the Year of a Divorce

Posted by mir

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.
Mar
20

Tax Rebate

Posted by Administrator

For those who haven’t already heard, this year there will be a nice tax rebate. In order to receive it, you must file a 2007 federal tax return.

People who earned over $3000 this year are eligible to receive up to $600 back. Married couples can receive up to $1200, and parents will receive an additional $300 for every child under 17 years of age.

People who are exempt from filing taxes must do so anyways in order to receive the tax rebate this year. To be qualified, you must also have a social security number.

Make sure to accurately file this year. There’s no point in not taking free money!