Taxes (Photo credit: Tax Credits) As you prepare your tax return, you have a decision to make about your tax deductions – you can choose between itemizing and using the standard deduction. But how do you choose? The Standard Deduction is just what it sounds like – a standardized deduction that you can choose to utilize by default, and you don’t have to do a lot of recordkeeping through the year in order to use the the standard deduction. In order to itemize deductions, you need to save receipts from various deductible expenses through the year, and use those to prepare your itemized return. Oftentimes it is a foregone conclusion, once you understand the differences between itemizing and the standard deduction. Standard Deduction vs. Itemizing: Facts to Help You Choose Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions. The following seven […]
charitable contribution
Important Tax Numbers for 2015
For 2015 the IRS has given the new limits regarding retirement contributions as well as estate and gift tax exemptions. Regarding retirement contributions employees may now defer $18,000 annually to their employer sponsored plan including a 401k, 403b, and 457 plans. This is an increase from last year’s $17,500 amount. Additionally, employees age 50 or older can now make an age based catch-up contribution of $6,000 which is a $500 increase from last year’s $5,500 amount.
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Year-End Charitable Giving Tips
The end of the year, especially around the holidays, is a time when many folks’ thoughts turn to charitable giving. Many opportunities present themselves, from the gentleman with the bell and the red kettle to our local food and coat drives. With this in mind, the IRS recently published their Special Edition Tax Tip 2014-13 which details six tips for charitable giving. The actual text of the Tip is listed below. In addition to those tips, I’ll offer one more: if you are interested in utilizing the Qualified Charitable Distribution option from your IRA – presently this option has not been extended for tax year 2014. It’s possible that it might be extended yet this year, so check back here – we’ll keep you posted.
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Charitable Donations
This time of year many people find it in their hearts to give. They’ll give to friends, family, loved ones and charitable organizations that can help maximize the gift such as a church, charity, or foundation. Last week I had written about the law of reciprocity and giving, and this week I’d like to mention how you can make your giving work in favor when tax season rolls around. As of this writing there are about 11 days left in 2013. Some individuals will be looking to see how much they can give or how much more they can give in order to receive the biggest tax deduction they can for charitable giving. Of course, gifts to friends and family are not deductible, but there are times when gifts or donations are completely deductible and may be to the tax advantage of the person giving or donating the gift. According to […]
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2014 Mileage Rates for Tax Deductions
Recently the IRS published the mileage rates for various classes of deductible miles driven for tax year 2014. This amount is used in place of managing, collecting and tabulating the exact costs involved in operating a vehicle throughout the year. In order to use the standard mileage rates, you just track the miles you drive for each purpose (see below) and then compute the deductible mileage on your tax return when you file it the following year. Keep a log of the miles driven and the purpose of the trip to substantiate the deduction. This can be as simple as a paper calendar with your log notes, or more elaborate (check around, I bet there are apps out there for your iphone or other gadgets to do this). You have a choice to either use the standard rate or the actual expense of operating your vehicle. In either case, parking […]
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Charitable Contribution Tips
As the tax year comes to a close, many folks are looking for ways to reduce their taxes by making charitable contributions. During December’s various holidays many folks are inclined to make extra contributions as well, in the spirit of the season. The IRS recently published a Special Edition Tax Tip 2012-15, which offers tips for tax benefits of gifts that you might make. The actual text of the Tip is reproduced below: IRS Offers Tax Tips for “The Season of Giving” December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year. Here are some “Season of Giving” tips from the IRS covering everything from charity donations to refund planning: Contribute to Qualified Charities. If you plan to take an itemized charitable deduction on your 2012 […]
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What Charitable Contributions Are Deductible?
Walk for Cancer – it’s raining! (Photo credit: miamism) As you prepare your income tax return, you may find yourself asking the question – how do I determine if a charitable contribution is deductible? In addition, you may have questions about just how to file for the various deductions – such as non-cash deductions, like contributions to Goodwill for example. The IRS recently published their Tax Tip 2012-57, which lists eight tips regarding charitable contributions that you may find useful. The text of the Tax Tip is included here: Deducting Charitable Contributions: Eight Essentials Donations made to qualified organizations may help reduce the amount of tax you pay. The IRS has eight essential tips to help ensure your contributions pay off on your tax return. If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific […]
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Year End Income Tax Planning
Image via Wikipedia Once you’ve reached the last month of the tax year, there aren’t a lot of things that can be done to minimize your income taxes. But there are a few things that could be done. For example, you could double up your real estate taxes by prepaying next year’s tax during December. Doing this with, for example, a $3,000 per year real estate tax bill could result in a reduction of tax for the year of $750 if you’re in the 25% bracket. Keep in mind though, that you’ll have forked out this money long before it is actually due in most cases, and for the next year you won’t have this deduction available if you used it in this year. The same could be done with your charitable contributions – there’s no reason that you can’t make additional contributions to your favorite charities at the end […]
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Leaving Your IRA to Your Family First, Then to Charity
Image by Mikey G Ottawa via Flickr Suppose you have a situation where you’d like to leave your IRA (or at least some of it) to a family member or a group of beneficiaries, and then leave the remainder of the IRA to a charity of your choice. One way to do this is to split the beneficiary designation between your family members and the charity. This is a simple way to make this designation, but it might not really achieve the purpose you’re hoping to. Suppose you’d like to make certain that a non-spouse family member has adequate income from your IRA for the remainder of his or her life, but you don’t want to overdo the bequest with a large appropriation (and taxes on the distribution). There’s a way to do this that may fit your needs: the Charitable Remainder Trust, or CRT. The Charitable Remainder Trust Using […]
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