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You can significantly lower your tax bill if you make the most of your deductions. The Internal Revenue Service claims two-thirds of taxpayers take the standard deduction. For the 2012 tax year, that’s a deduction of $5,950 for single taxpayers and married people filing separately, $8,700 for heads of household and $11,900 for married couples filing jointly. The third of taxpayers who itemize, however, claim far more -- an average $25,545 in 2009, the latest figures available. Some deductions are more obvious than others. For example, if you have a mortgage, you probably know that mortgage interest is deductible. Ultimately,…
There are a few important tax deductions for a dependent's elderly mother that you aren't going to want to miss. Find out about tax deductions for a dependent's elderly mother with help from a professional public speaker and radio personality in this free video clip.
Foreign funds withholding tax on dividends is a very important topic that you're definitely going to want to know as much about as possible. Find out about foreign funds withholding tax on dividends with help from a professional public speaker and radio personality in this free video clip.
Many people don't realize that you only have a certain period of time to amend a tax return. Find out more information about the time period available to amend a tax return with help from a CPA and partner at Safe Harbor, LLP in this free video clip.
Buying puts against a large gain is a tax-driven strategy that could potential reduce or defer certain tax consequences. Find out about tax exposure for buying puts against a large gain with help from a registered investment adviser in this free video clip.
Deducting insurance payments on income taxes requires you to follow a few very specific steps. Learn how to deduct insurance payments on income taxes with help from a financial expert in this free video clip.
The mortgage tax deduction for the average American family has a number of clear advantages that shouldn't be overlooked. Learn about the advantages of the mortgage tax deduction for the average American family with help from a home mortgage professional in this free video clip.
Just because you have a high net worth doesn't mean you won't get any tax deductions. Learn about tax deductions for a high net worth with help from a taxpayer representative in this free video clip.
The federal Wage and Tax Statement, also known as a W-2 form, is completed by employers each year, and the employer bears the responsibility for their employees' timely access to the completed form. The W-2 form itself and filing rules are established by the U.S. Federal government and don't change from state to state, and the State of Washington website links to the Social Security Administration for W-2 information. However, Washington State's Office of Financial Management website does maintain blank forms for past years, including 2008, for the use of state government agencies.
Finishing a below grade basement will often lead to increases in your property taxes. Find out how to figure increases to your property taxes from finishing a below grade basement with help from licensed California real estate broker in this free video clip.
When you need to report a capital gains distribution depends on a few key factors. Find out if you have to report a capital gains distribution if the money was reinvested with help from a financial planner in this free video clip.
In the tax code, property damage is usually referred to by a term called "casualty losses." Get tax deductions for property damages with help from a certified public accountant and financial planner in this free video clip.
You are working on this year’s taxes and realize you forgot to take an eligible deduction when you filed last year. Or after you file this year's taxes, a wayward 1099-DIV shows up. You can correct your return by filing a Form 1040X, amending your return if you have changes in your filing status, income, number of dependents, credits or deductions.
The Internal Revenue Service imposes penalties for violations of tax rules. A penalty is assessed on a percentage of your income tax for failure to pay by the due date as well as insufficient tax payments during the year. Larger penalties are enforced for substantial understatement of tax, fraudulent reporting, and filing a frivolous tax return. Giving the IRS a check that your bank later returns earns a bounced check fee.
The tax code contains many opportunities for you to reduce your taxable income and one of these is charitable contributions. Tax-deductible charitable contributions come in many forms. They are not limited to monetary contributions but also include goods and services provided to qualified organizations. Volunteering your time is not tax deductible, but some expenses associated with your volunteer work may be.
The head of household filing status enables unmarried taxpayers with dependents to take advantage of an increased standard deduction, decreased tax rates and decreased income limits for certain credits and deductions. For eligible filers, the status typically offers the best tax benefit and results in the lowest tax liability. You must meet several criteria to qualify for the head of household filing status, the most important of which is having a qualifying child or other qualifying relative.
The Internal Revenue Service does not require a specific method for recording most expenses claimed on tax returns. Instead, a general standard requires retaining all documents that substantiate deducted expenses. Multiple items of evidence may support a particular expense. Some types of expenses necessitate records with special details. The most common among these categories are deductions for charitable giving, casualty or theft losses, education costs and business expenses for either employees or proprietors.
The records you need to substantiate charitable contributions depend upon the amount you donate and whether the gift is cash or property. Only contributions to qualified organizations are eligible for tax deduction. This primarily includes nonprofit groups with functions related to religious, educational, scientific, artistic or humanitarian purposes. Your donations to political groups or other entities not approved by the IRS are not tax-deductible.
The IRS introduced electronic tax return filing in 1990. Since that time, the e-file system has processed nearly 1 billion individual income tax returns. IRS rules took effect in 2012 to mandate that nearly all paid tax return preparers file their clients' returns electronically. Individuals preparing their own returns also have the option to e-file through tax software or the IRS website. Electronically filed returns are generally processed within 24 to 48 hours after filing, which is significantly faster than the timeline for paper returns.
Deducting money from a traditional IRA for your favorite charity is something that you have to do in a very specific way. Learn about deducting money from a traditional IRA for your favorite charity with help from a professional public speaker and radio personality in this free video clip.
If your job is not sending you a W2 form you have some very clear options as defined by the IRS. Learn what to do if your job is not sending you a W2 with help from a business consultant and marketing expert in this free video clip.
The IRS has a very specific code dealing with organizations that accept charitable donations. Find out how to form an organization that accepts charitable donations with help from a practiced attorney in this free video clip.
Burials are not the same thing as medical expenses. Find out about tax deductions for burials with help from an attorney in this free video clip.
You’ve inherited $50,000 in an IRA from your late father. “Wow, what an unexpected bonanza!” you say to yourself. “I’ll pay off my mortgage!” Not so fast. Unless you follow a maze of rules to the letter, you could end up signing over a chunk of that bonanza over to the IRS. The good news is that by better understanding the challenges you face and taking several well-planned steps, the money -- or most of it anyway -- will stay with you, just as your father wanted.
In 2010, the U.S. government extended its tax credit for homeowners who made qualifying energy efficient upgrades to their homes. This was, however, a tax credit and not a tax deduction. The opportunity to take advantage of the existing tax laws and obtain tax deductions for home improvement still exists, as of the date of publication. Tax deductions for deck awnings can be taken as long as the homeowner is able to justify the expense under an existing tax deduction category.
While it is not the result of a direct tax, an implicit tax represents money lost to an individual due to certain government policies or financial realities. In one example, Michael F. Cannon, writing for Kaiser Health News, alleges that forcing Americans to buy health insurance would amount to a significant implicit tax, because the policy takes income away from individuals. While calculating the rate of an implicit tax is a simple matter of dividing the amount of money lost by the total amount of money being taxed, defining these amounts can be tricky.
College can be an expensive investment; fortunately, the government allows you to deduct certain education expenses against your income for the purposes of taxation. Tuition fees and interest on student loans can, in certain situations, be deducted against your taxes. Calculate your education expenses and deduct them on your income taxes to keep your expenses down while paying for school.
Insurance claim expenses are divided primarily into two categories: allocated and unallocated claim expenses. An allocated claim expense is a financial loss that is related to a specific event that is reimbursed by your insurance provider. In contrast, an unallocated claim expense is a financial loss related to an event that will not be covered by your policy. Your insurance provider is liable for all allocated claim expenses covered by your policy.
If you're selling a home there are a couple of different things to consider. Find out if titling is tax deductible with help from a business consultant in this free video clip.
The Pennsylvania tax forgiveness program allows low-income individuals and families to claim a refund of all or part of their income taxes. According to the Pennsylvania Department of Revenue, one-fifth of Pennsylvania families qualify for tax forgiveness. To file for tax forgiveness, you must apply when you file your state taxes. However, people who think they may qualify for tax forgiveness and who have already filed can file an amendment to receive their refunds.
The federal Child Tax Credit helps you reduce your income tax by up to $1,000 per child. Your child must be under the age of 17 to qualify, and be shown on your income tax statement as your dependent for whom you provide more than half in financial support. Your child must be a U.S. citizen and live with you as his main residence. In addition to the Child Tax Credit, certain recreational activities can be tax-deductible depending on the nature of the program, type of expense and method of payment.
Truck drivers who pay for work-related expenses that their employer doesn't reimburse can claim these expenses as itemized deductions on their income tax return to reduce their tax obligation. Self-employed drivers can also claim deductions for expenses they incur on the job. Drivers deduct these expenses from their gross income when they file their taxes, which lowers their tax liability.
In hard economic times, taxpayers who donate money to needy families should be commended for their generosity. But while your donations may make you feel good about helping those less fortunate, you must adhere to the Internal Revenue Service's donation guidelines to qualify for a tax deduction on your income tax return.
Elderly people living on a fixed income often struggle to pay property taxes. However, seniors living in Arizona can apply for a number of state and country programs aimed at making this burden more manageable for the elderly. However, all of Arizona's property tax breaks programs for senior citizens have strict income and property type guidelines.
The force between the power train and engine in a vehicle can cause wear and damage to gears, causing vehicle owners with damaged components to pay service costs to repair or replace these components. Taxpayers can take federal deductions for drive train and engine service and repair expenses if they use their vehicle for business purposes.
Federal employees are eligible for many kinds of retirement savings plans. One option available to both civilian and military workers is a thrift savings plan. It's not designed as a primary retirement savings plan, but rather as a supplement to other retirement options. While thrift savings plans benefit most federal workers, tax penalties kick in when you separate from federal employment and withdraw your money.
As of October 1, 2011, the Georgia state sales tax rate remained steady at 4 percent. Individual counties and the city of Atlanta add local tax rates of between 1 and 3 percent to this state rate to determine the total sales tax percentage charged to consumers. While the payment of sales tax reduces "cash in hand," the amount of tax paid within the state of Georgia is a deduction, or write-off, on a federal income tax return.
When spouses agree to a divorce settlement at the end of their marriage, the terms of the settlement will likely affect each party's tax filings. A settlement often establishes alimony, child support, division of assets, assignment of debt obligations and payment of legal fees. The IRS sets the federal tax rules that determine the deductions related to the terms of the divorce settlement.
Illinois imposes a straight tax on each individual, trust and estate with the same percentage owed by each entity. This percentage can then be lowered based on state tax credits and deductions. For the 2011 tax year, the tax percentage is 5 percent of the taxpayer's net income. Individuals and businesses search for state tax credits and tax deductions to lower this percentage as much as possible. Standard tax deductions exist for individuals as well as deductions for education and health care expenses. Hotels also qualify for a special deduction for Illinois taxes paid on some of their business expenses.
Paying past tuition may lower your overall debt and help you maintain a clean credit rating, but the act doesn't itself secure any tax benefit. The IRS allows you to claim tuition tax deductions only in the tax year in which you actually incur the expenses. You cannot claim deductions if you have paid your tuition with certain funding sources, such as a tax-free scholarship, an employer-funded education reimbursement program or an education savings account. You can, however, deduct interest on student loans in the years when you are paying them off.
Some businesses are more efficient when a family works together in it. It’s not out of the question to sometimes see kids working in their parents’ business or for an adult relative. All of this might sound daunting for taxes. However, the Internal Revenue Service promotes the idea of hiring family members in your business. The tax benefits are numerous.
Inheriting valuable investments is certainly a welcomed event; however, if you don’t properly plan for paying taxes on these investments you may find yourself in quite the financial predicament. To ensure that you don’t end up with a tax debt that you are unable to pay, carefully calculate your tax obligation when you inherit your investments and plan for the payment of this tax debt.
A preacher's wife is not entitled to any tax benefits merely for being married to a member of the clergy generating his own tax deductions. However, some preacher's wives are separately commissioned, ordained and licensed as ministers to work alongside their husbands and receive separate pay from the church. When this occurs, the wife may claim the same tax deductions the preacher is entitled to.
Tax write-offs have a greater impact on your overall tax burden if they are considered tax credits rather than tax deductions. Tax deductible amounts, such as standard or itemized deductions, reduce taxable income. Tax credit write-offs are applied at the end of the tax calculation process and further reduce the tax payment.
Homeowners cannot deduct interim occupancy fees paid for living in a property before the final closing date arrives on the property’s purchase. The Internal Revenue Service considers these payments part of the settlement costs incurred to purchase a property. Occupancy fees are also not added to or subtracted from the cost of the property when calculating the asset’s basis, or the property’s value for tax purposes. The principal tax deductions related to owning real estate include mortgage interest and certain real estate taxes.
Saving money while preparing your tax return is often about knowing the tax deductions available to you and making sure to claim them. In many cases, it's tempting to use the short form income tax return — known as Form 1040-EZ — because it's easier to understand and quicker to complete. But in some cases this may result in the inability to claim certain deductions that can increase your tax savings or help maximize your tax refund.
The mental-health industry uses wilderness therapy, which relies on the therapeutic effects of isolating patients in a natural environment for an extensive period of time, in an attempt to mitigate the manifestations of their conditions. The Internal Revenue Service (IRS) treats most of the costs of such a program as a deductible medical expense. However, there are limits to the amount you can deduct.
Taxes are inevitable, but the savvy individual searches high and low for as many IRS-approved deductions as possible. Among these are unreimbursed business expenses for employees. Business-related travel, lodging and meal costs are deductible if they amount to more than 2 percent of your adjusted gross income. Unreimbursed mileage is a valid deduction.
College is expensive and costs continue to rise. Saving money before you or your dependent begins school can make it easier to pay for school. Saving money that is allowed to grow tax-free can make paying for school even easier. The Coverdell Education Savings Account (ESA), is a federal savings account that provides tax-saving benefits for college savings. A 529 plan is a similar account, which is sponsored by individual states. Each state has its own 529 savings program, which are all treated the same by federal tax rules.
Ministry schools serve educational and religious purposes – two characteristics that meet the criteria for becoming an IRS-qualified organization eligible to receive tax deductible donations. However, only non-profit ministry schools qualify for a tax deduction. The IRS publishes a list of approved organizations and institutions in Publication 78, though donors may contact the IRS directly to find out if a particular ministry school qualifies.
