Tax Deductions & Advice

Top 5 Overlooked Tax Tips

Tax Man — Wed, 27 Feb 2008 12:14:04 +0000

However you work your taxes - the old-fashioned way, utilizing software packages or hiring a professional - it is more than worthwhile to be aware of the income tax deductions and credits which can save you money.

According to the Internal Revenue Service, the biggest claimed value comes from personal exemptions, which in 2005 came to $842 billion. Most taxpayers, in fact, do claim their exemptions - but there are many other tax perks which may be overlooked. (more…)

Tax Preparers Cracking Down

Tax Man — Tue, 26 Feb 2008 12:01:35 +0000

Burden for preparers

Tax preparers may start being tougher in asking you to prove your entitlement to certain deductions. This is because a law was recently passed that requires these professionals to help weed out tax dodgers. This may result in increased paperwork and greater fees to some taxpayers since a longer amount of time will be required for preparing many returns.

Tax preparers now rely on different standards thanks to the IRS. This change is supposed to encourage preparers to be more careful about agreeing to sign returns with shady or extreme income tax deductions without warning the IRS of such behaviors through a specialized communication form. (more…)

Tax Credits and Tax Deductions - Qualification Limits

Tax Man — Sat, 23 Feb 2008 19:13:06 +0000

If you’ve ever stooped through a short door or tried to reach a book off the top shelf you know how uncomfortable it is to be the wrong size. The same thing is true with taxes - many tax benefits are only available to families and individuals whose AGI (adjusted gross incomes) or MAGI (modified adjusted gross income) falls within certain limits.

Calculating adjusted gross income (or AGI) is actually quite simple. Take all the income you report on your taxes, your “gross income,” minus any deductions (called “adjustments”) and what’s left is your adjusted gross income. The following items are all expenses you can legally deduct from your gross income: (more…)

Standard Deductions versus Itemized Deductions

Tax Man — Fri, 22 Feb 2008 18:35:59 +0000

Deductions are expenses the IRS allows you to subtract from your taxable income, lowering your overall tax bill. There are two ways to file deductions - using the standard deduction, and “itemizing.”

Standard Deductions

Every taxpayer is allowed to take a standard deduction. The standard deduction assumes you have an “average” amount of tax-deductible expenses, and lumps them into one easy sum based on your circumstances. For 2007, the standard deduction amounts are: (more…)

5 Tips to Maximize your Tax Breaks

Tax Man — Fri, 22 Feb 2008 17:01:10 +0000

What’s the difference between a taxidermist and a tax collector? According to Mark Twain, “The taxidermist takes only your skin!” Many Americans would agree with him - tax bills often seem unreasonably high. Fortunately, there are many completely legal ways to reduce your taxes and keep more of your hard-earned money for yourself and your family. They’re called tax breaks.Tax breaks are provisions of the income tax code that reduce the amount you and your family have to pay. Some people think claiming tax breaks is cheating - something greedy corporations and rich people do - but it’s not. The famous Judge Learned Hand once stated, “There is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike, and all do right, for nobody owes any public duty to pay more than the law demands.” You are completely entitled to every tax break you qualify for, and not taking those breaks is only giving the IRS a gift they don’t deserve.

Here are five simple rules to remember when looking for tax breaks: (more…)

Top 10 Tax Tips for the Self-Employed

Tax Man — Sun, 17 Feb 2008 14:57:45 +0000

Innovative technology and the convenience that the Internet and teleconferencing brings have led more coaches, contractors, professional consultants, and freelance workers to go into business for themselves. Being self employed isn’t a means of simply generating additional income to supplement a job - it has become a full-time endeavor. A lot of full-time workers are setting their own hours while making great incomes. However, self-employed people do have distinct tax concerns. Read on for 10 helpful tax tips to reduce the bite Uncle Sam takes out of your income: (more…)

Tax Refund Anticipation Loan - Consumer Advisory

Tax Man — Tue, 12 Feb 2008 13:45:13 +0000

This tax season 10% of Americans will let someone borrow them their own money through a tax refund anticipation loan. Rates might be as high as 744%. A rapid refund is just your income tax refund given to you on the spot by your tax preparation service- usually within 1-2 days. Rather than waiting for your tax return to come through the mail or via direct deposit directly from the government some people are choosing to get money in their pockets immediately at a great expense to themselves. Despite the length of the loan lasting only about 10 days they are costing individuals hundreds of dollars in some cases. (more…)

Homeowner Tax Deductions

Tax Man — Sun, 10 Feb 2008 14:33:59 +0000

Homeowner Assistance for 2007

Increasing the amount for AMT exemptions was one of many changes in tax law during 2007. The federal legislature also made possible tax deductions for persons facing home foreclosures, as well as those purchasing mortgage insurance policies last year.

Mortgage insurance is mandatory in cases where buyers put down less than one-fifth of the purchase price of a home and are using government-subsidized or private banking loans. The premium for this policy is deductible for up to two homes, but only if the insurance contract was signed in 2007.

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10 Ways to Beat Tax Procrastination

Tax Man — Thu, 07 Feb 2008 18:52:02 +0000

Does the thought of preparing your small firm’s tax return make you queasy? Do you put it off until the deadline, hoping against hope that it will disappear? You don’t need to go through this anymore. There is now an excellent small business owner’s guide to tax preparation that can aid you to stop procrastinating any longer. (more…)

Tax Advice Follies of the Rich and Foolish

Tax Man — Mon, 04 Feb 2008 05:38:56 +0000

Wesley Snipes, star of such amazing action films such as Blade, Blade II, Blade III, Blade IV, and Blade V faces 17 years of imprisonment and resulting ass-rape for charges of failing to file a tax return.

Mr. Snipes’ defense is that he was “following unscrupulous tax advice”.

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Tax Deduction for Commuting Costs

Tax Man — Thu, 31 Jan 2008 11:08:51 +0000

Deducting mileage for your commute is not allowed by the IRS unless you know a few commuting mileage tax deduction tricks. The IRS mileage allowance can include virtually all your commuting mileage expense, allowing you to take a mileage tax deduction for the miles you log from your home to the office or other place of business, if you meet the following two criteria: You are a small business owner or self-employed person, and you have two offices or work locations: one outside the home and one inside the home. (more…)

Free Tax Advice in Virginia

Tax Man — Wed, 30 Jan 2008 13:25:51 +0000

Riding on the coattails of TurboTax’s Free Tax Question gimmick, the Virginia society for Certified Public Accountants have decided to throw their own version of this same shindig.

Anyone who files federal or state tax returns in the Commonwealth of Virginia is offered free tax help and tax advice through the Tax Resource Center part of their website: http://www.financialfitness.org/.

The tax questions hotline will be open from January 31st to April 8th. Unlike the TurboTax folks, they have their answer desk open during the times that people are actually likely to file their taxes.

I wonder what percentage of people actually file their taxes before January 31st. I mean, most people don’t even get their W-2’s until sometime in February. So, Virginian’s - someone’s got your back, and they’re not pulling any punches. Head on over and get yourself some free tax advice.

How to Pick A Tax Attorney

Tax Man — Mon, 28 Jan 2008 17:09:56 +0000

First and most importantly before we lay out the basics of making a wise choice-one that will hopefully develop into a long term professional relationship; it is important to decide why you want a tax attorney. Truly, the myth of the safety net that tax attorneys provide is just that a myth. Having said that, there are many valid and important reasons to use and be affiliated with a tax attorney.

Second, before we pick a tax attorney, take an internal audit and make sure that your not bring a tax attorney on board solely to have bragging rights of having a tax attorney, or that you have the extra cash to do so, but know that a tax attorney is not always a substitute for an accountant; sometime yes-most of the time both are necessary and many tax attorneys will have in-house bookkeepers and accountants to assist him. (more…)

Free Tax Advice

Tax Man — Sat, 26 Jan 2008 12:19:08 +0000

The folks at TurboTax have started FreeTaxQuestion.com. Their ads say that after you submit your tax question there, a real person will call you and answer your question within 24-48 hours.

Here’s the question sent in by the filife blogger:

Should I file individually (as opposed to my parents claiming me as an exemption)? I’m under 24 and a full-time college student who lives in student housing (but I’m thousands of miles from home), but my parents do not provide more than half of my support. I work and pay for school (tuition, books, housing, food, etc.) with scholarships, personal savings and money from work that is taxed, but not part of federal work study. I’m not legally emancipated. If I am eligible to file individually, would this maximize my own return? Or is the difference the same? (more…)

Handy Tax Deductions For Rental Properties

Tax Man — Fri, 25 Jan 2008 22:16:40 +0000

If you own rental property, you should be aware of your tax deduction options. Knowing how to save money can help you to pay your mortgage and keep your income higher from your rental units. You can get different benefits and should know about the normal deductions that you can make from your properties.Here’s a list of some that you should know about. (more…)

TaxACT Offers Free Tax Software on Amazon.com

Tax Man — Fri, 25 Jan 2008 12:27:59 +0000

CEDAR RAPIDS, IA–(Marketwire - January 24, 2008) - 2nd Story Software®, Inc., developers of TaxACT® and pioneers of totally free federal tax preparation software, announces the launch of its online store on Amazon.com for the 2007 tax season.

With the number of tax preparation software options available, consumers can become overwhelmed when trying to decide which option is going to best meet their needs. Amazon customers shopping TaxACT’s Amazon Store will benefit from having a single online destination to research their options prior to purchasing tax software. By TaxACT becoming an Amazon merchant, more consumers can become familiar with the value and added ease TaxACT provides — including a completely free tax software option TaxACT Standard.

Like Paying Taxes? Don’t Read This…

Tax Man — Thu, 24 Jan 2008 16:07:20 +0000

Canada, like the US, has two tax systems - one for employees, and another one – for business owners. This is not what the CRA will tell you but the fact remains - employees are very limited in what they can write-off while businesses are entitled to a wide variety of legally deductible business expenses. (Next logical step would be to stop levying taxes on successful entrepreneurs as I cannot think of one government service worth paying for - which could not be better provided by the private sector…but hey, we are not building the moral case against taxation here…)

So it might seem pretty simple and straightforward: one should open a small business and join the ranks of 2.6 million Canadian entrepreneurs who enjoy the favorable tax treatment of their income streams. You don’t need to be a big guy - if you operate a legitimate home-based business with the intent to produce a profit, you can qualify for most of the same deductions as an “office-based” business.

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Most Overlooked Tax Deductions

Tax Man — Wed, 23 Jan 2008 16:27:36 +0000

Tax season is here. It’s time to dig out all your receipts, paperwork, documentation and cuddle up with your calculator.

It can be a real pain to figure out what you should, could, or can’t deduct. But, finding all your deductions can really add up to a big refund.

Experts have said many taxpayers forget to deduct their charitable donations like electronics, clothes, and money. Now, the IRS requires documentation in detail for these donations, along the lines of a cleared check or receipt.

Energy efficiency improvements on your home can also jump right in on the tax deduction wagon. Upgrades to your doors, windows, and insulation are deductible, if they improve the energy efficiency of your home.

Two other deductions frequently overlooked are the Earned Income Credit for working families with low incomes and the Child Tax Credit if you have kids under 17. If you do your own taxes, both of these can be a pain to calculate, but well worth the effort.

Here are a few more tax deductions which are frequently overlooked:

Donating Stock or Mutual Funds

Holiday Donations - Track Them to Deduct Them

Home Ownership Tax Deductions

Charitable Items - High Prices Leave Deductible Portion

Student Loan Interest Tax Deduction

Home Office Expenses

Hybrid cars can drive up the savings
Donate Your Car to Charity

Natural Disaster Loss Deduction

Work Uniform Expenses are Deductible

Donations in Less Obvious Ways

Higher Education Tax Breaks

Charitable Deductions - Deducting Your Non-proft Contributions

When Should Non-homeowners Itemize

5 Small Business Tax Deductions You Don’t Want to Miss

Tax Man — Tue, 22 Jan 2008 16:20:54 +0000

The tax formula is fairly straightforward: your small business must pay taxes on what’s left of your revenues after you have deducted all your expenses. With that said, it would seem to make sense to claim the maximum allowable number and amount of deductions in order to reduce your tax liability. Luckily, the IRS gives you lots of choices as to tax deductions that you can legally claim.

Here are some deductions that you don’t want to miss out on when doing your business tax planning. (more…)