Your Tax Deduction

Your Tax Deduction

If you have been giving money a way bit too much, its time for you to get some relief too right?

your contributions can be tax deductible under IRS Form1040, Schedule A. and it adds up to a huge chunk.

But before you make the donations you must carry out a few checks. You must remember that only donations made to organizations that are recognized by tax agencies are eligible for tax deduction. Publication 78 gives a list of organizations that are allowed for these purposes and the same is available online and in public libraries too.

Donations to individuals, political organizations or political leaders cannot be claimed for tax-deductible purposes nor can you claim benefits for spending time raising money for organizations by holding raffles, bingo or any game of chance.

Contributions made in the form of merchandise, goods or services qualify for tax deductions. And it is on Fair Market Value only. For example, if you are gifting stocks, then the highest and the lowest traded prices are taken and the average is assumed as FMV for the purpose.

You can also donate your car, planes or boats. Resale value at the time of donation is calculated. If the claimed value exceeds $500, then only the gross profits can be claimed.

If you are donating a household or personal item then the deduction can be claimed on the amount that the item would have fetched in a garage sale or at a flea shop. All charitable contributions over $250 need a proper receipt to qualify for tax deduction.

Remember, the tax year is also a crucial factor; deductions are allowed on items only in that year and no carry forwards.
So go on and keep a list of your generosity. The tax people would appreciate it. So would you.

And god is watching you from the sky up above and showering you with the choicest of blessings.

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If You Own A Small Business Then Try Home Office Tax Deduction

If You Own A Small Business Then Try Home Office Tax Deduction

Do you spend most of your time working from home, then why not try making it a home office and add to the advantage of tax benefits.

 The business utilization of your house makes it possible to cover part of such household costs as utilities, rent, insurance, depreciation, mortgage interest, real estate taxes, repairs, and improvements.

 You need to make a few specifications while doing so, seaside a part of your house for theverysame purpose and make sure you use the place too.

 Make sure you have a dedicated space that is devoted only to your business and the like. Do not mix personal stuff to this.

 It also shows that you are into serious business and not trying to fool the tax authorities.

 In addition to using your home on a regular and exclusive basis for business, it is also essential that your home be your primary place of business. Make sure that your home is the main or the head office, if you have more than one office. Hats when you can lay your hands on such a claim...

 Thus it is not compulsory that all activities taking place at home should be your chief source of revenue. What is essential is that your home is used for book keeping, ordering goods, planning meetings and for consultations with clients / patients / customers.

 It may be necessary, at times, to prove that you are using a part of your home as an office. In this case you should have the following proofs ready:
 These are very crucial when the authorities come running for proof.

 1. Draw a diagram to show which part of your home is being used as your office. If possible, take photographs to give a clear idea.
 2. Make sure that all business mail comes to your home.
 3. Your business cards and stationery must list your home address as your business address.
 4. You must get a separate phone line installed in the business part of your house.
 5. Keep a record of the visits of your clients or customers to show that you have actually conducted business at home

 These are a few finer points that could help you save those big bucks from those big fellows, so guys happy saving.

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All Taxes Standard Tax Deduction - Find Out How This Really Works!

All Taxes Standard Tax Deduction - Find Out How This Really Works!

These are the deductions that you get as a part of your normal tax cut.

The standard tax deduction is a safety valve. It cuts your tax by a flat sum and in a direct way. Totally hassle free, unlike in itemized cuts where you have to go into greater detail of everything. The governmentallows you any one of the following.

The slabs are revised annually so as to keep them under the revised inflation costs.

Thus,
-the standard deduction available to a single individual in 2004 was $4,850;
-for the head of household it was $7,150;
-for a married couple filing a joint return it was $9,700;
-for a qualifying widow (err) with dependent child it was $9,500;
-and for a married couple filing separate returns it was $4,850.

People over the age of 65 or who are blind get higher deductions and also the spouses of such people.

If you are a part of somebody's deductions, then you can get a lesser relief. As a student, you can claim a deduction under grants as it is treated as an income.

The benefit is not available to those who are married but whose spouse itemizes deductions; those who file a tax return for a short tax year because of a change in their annual accounting period; and to those whose status is that of a non-resident or dual-status alien. A non-resident person married to a US citizen can claim these benefits if they choose to be treated alone.

The next time you file your returns, take a close look at the standard deduction you are entitled to. It could work better and simpler than the itemized approach. And could save you not only those dollars but also the time and effort too. After all there are many more things in life than too a dollar....

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