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|Posted on October 14, 2015 at 2:05 PM||comments (199)|
Today we discuss expenses that relate to your employment and must be more than 2% of your Adjusted Gross Income before they can be deducted.. These are not to be confused with expenses for any Self Employment.
Unreimbursed employee expenses can be deducted on Schedule A is the are ordinary and necessary for your position. If your employer includes the amounts that they pay you in box 1 of your W2 those are NOT considered reimbursed and can therefore be deducted on your return. In some cases you may have to file Form 2106 along with your Schedule A in order to take the deduction. These include:
If Form 2106 is not needed your expenses can be written in on the dotted line. Remember to keep all receipts, milage records, and other information pertaining to your deduction. If your return is ever selected for review by the IRS you will need that information to substantiate your deduction.
Expenses that can be written in include:
Tax Preparation Fees can also be deducted in this section. This is the fee you paid to have your prior year's return prepared. Include any fees you were charged for paying via a credit card on line 23.
Line 23 of the Schedule A is Other Expenses. These can include items such as the credit card fee charge to use a credit card to pay for your tax return preparation as well as:
Line 28 of Schedule A is Other Miscellaneous Deductions. This includes:
|Posted on October 8, 2015 at 12:40 AM||comments (21)|
Today I would like to discuss the deductions for Casualty and Theft Losses that may help lower your tax bill. A Casualty Loss is the damage, destruction, or loss of property resulting from a recognizable event. This inlcudes, but is not limited to, Fire, Tornados, Hurricanes, Flooding etc. A casualty is sudden, unexpected and unusual. A Theft Loss is the taking and removing of money or property with the intent to deprive the owner of it. It must be illegal under the state law, and done with criminal intent.
Examples of Deductible Losses:
Examples of Nondeductible Losses:
There are a few cases where a nondeductible loss can become a deductible loss. One example, the corrosive damage caused by defective drywall installed in homes between 2001 and 2009. See your tax professional if you think you may qualify for a casualty or theft loss of items not listed.
When claiming the loss there are a few deduction limits to be aware of:
Your casualty or Theft Loss must be reduced by any and all insurance reimbursements received and is the lesser of your cost or basis in the property or the reduction in the fair market value due to the loss. Form 4684 is used to claim a loss and then transfered to form 1040 schedule A.
There are special rules for losses in a Federally Declared Disaster Area. See you tax professional for specific information on Casualty and Theft losses for your situation.
As always, Excel Tax and Consulting Services is here to help lower your taxes accurately. Call or Stop by today.
|Posted on September 30, 2015 at 2:25 PM||comments (12)|
This week we discuss the "Charitable Contributions" deduction on the 1040 Schedule A. Many are aware that they can deduct cash and items donated to a charity but are unsure of the rules for record keeping and the actual deduction.
To be deductible the contribution must be to a qualified organization. Church, School, and Veternan's Organizations are amoung the leading groups on most individual tax returns. You can deduct only the amount in excess of the fair market value of any item you receive in return. A good example of this: A church charity dinner at $100 a plate. You can deduct the FMV of the dinner over what you would have paid elsewhere for a similar dinner. Let's just say that the dinner would have cost $25 at an eating establishment, that means that $75 per plate is deductible. Another good example would be a school silent auction where you when an item, lets say a painting, with a winning bid of $400. The painting is worth $200, you can deduct $200.
Also, when deducting cash donations you must maintain a record of either a bank statement or written notification from the organization with the amount or amounts of the deduction that includes the dates.
Any donations over $250 in cash or property must have a statement from the organization. Non cash donations over $500 but less that $5000 require form 8283A and over $5000 require form 8283 A with section B.
There are special rules for donating certain types of property such as cars, boats, planes, etc. The deduction can be limited depending on what the organization does with the item after receiving it from you.
I like to tell all of my clients that donate clothes to organizations to take pictures of the items to place with their return and the slip from the organization so that they have tangible proof of the "Good Used Item" that they donated. These pictures can come in handy during an audit if the contributions are in question.
If you need further information you can call or stop by Excel Tax and Consulting Services or check the IRS website for more information.
|Posted on September 24, 2015 at 12:15 AM||comments (9)|
This week we discuss the "Taxes You Paid" Section of the Schedule A Itemized Deductions.
There are a few taxes that can't be deducted in this section. These include:
State and Local Income Taxes can be deducted. These include:
If it yields a better deduction, you can choose to deduct state and local sales taxes instead. There is a need for reciepts unless you use the standard amounts.
Real Estate Taxes can be deducted. These Include:
You can include State, Local and Foreign taxes you pay on real estate you own that is not for business. DO NOT include charges for improvements that increase the property value.
Personal Property Taxes can be deducted. These Include:
Only taxes based on value alone and are charged yearly. Example: Car License Fees in Iowa.
Interest You Paid:
This includes mortgage interest on your main home and your second home. There are limits as to the amounts you can deduct.
Mortgage Insurance Premiums:
These are premiums paid on a mortgage insurance contract entered into after December 31st, 2006.
This is interest you paid on money borrowed for investments and does not include any interest allocable to passive activities.
Be sure to check all of your Taxes You Paid deductions to make sure you are getting the highest deductions allowed. Call or stop by to speak with one wof our representatives today so you are ready for tax season!
Excel Tax and Consulting is here for you!
Next Week's Blog will Include "Gifts to Charity" and "Casualty and Theft Losses"
|Posted on September 16, 2015 at 1:00 PM||comments (23)|
One of the biggest question I get every year is "What can I deduct on my return?". Today's post will be the first in a series of post on the Schedule A Itemized Deductions. I hope this helps the majority of the taxpayers with questions on their deductions.
Medical expenses are deductible when they are more then 10% of your Adjusted Gross Income (AGI). If either you or your spouse is 65 years or older you can deduct these if they are more than 7.5% of your AGI.
What medical expenses are deductible? General medical expenses you pay for yourself, spouse or dependent are deductible. These expenses must be paid for in the year you deduct them. Not the year of the service, unless they are one in the same.
Example 1: You have a major medical procedure in April. Your bill is $10,000 after insurance, you pay $100 a month from May till December of the same year. You can deduct the $800 payments in the current year. The rest in later years as paid.
Example 2: The same information as in example 1 but instead of making payments you pay the whole $10,000 with a credit card. You can deduct the whole $10,000 on the current return.
Most medical and dental expenses can be deductible as long as they are legal, not for cosmetic services (some exceptions apply), and are required via a doctor.
Example 1. Breast augmentation is not deductible, but Breast Reconstruction is deductible for a cancer patient.
Example 2. Capping, Crowning, Braces and other dental procedures are deductible but Teeth Whitening or bleaching is not deductible.
Did you know that expenses you incur while remodeling your home to make it more accessible for your medical needs may be deductible?
Constructing entrance or exit ramps for your home.
Widening doorways at entrances or exits to your home.
Widening or otherwise modifying hallways and interior doorways.
Installing railings, support bars, or other modifications to bathrooms.
Lowering or modifying kitchen cabinets and equipment.
Moving or modifying electrical outlets and fixtures.
Installing porch lifts and other forms of lifts (but elevators generally add value to the house).
Modifying fire alarms, smoke detectors, and other warning systems.
Adding handrails or grab bars anywhere (whether or not in bathrooms).
Modifying hardware on doors.
Modifying areas in front of entrance and exit doorways.
Grading the ground to provide access to the residence.
Don't forget that all your medical miles can really add up! Keep a log of your miles for medical purposes each year. Everytime you use your vehicle for medical reasons write the staring odometer, date, time, reason, place you went, then the ending odometer reading for the trip.
Overnight stays for medical purposes can also be deducted as a medical expense. Meals are not included in the medical expenses for the overnight stay.
For more information on deductible medical expenses Stop in or Call us today!
A good referrance source is IRS Publication 502 which can be found at: http://www.irs.gov/publications/p502/ar02.html#en_US_2014_publink1000178887