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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!

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

Oct
27

Tax Deductions You Don’t Know About

Posted by mir

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
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.