It is New Year's Eve and goodbye 2011. Time to get ready for 2012 to poke up its head and begin a New Year. With that, tax filing is around the corner. What can you do today to help come April?
First, and easiest, tomorrow morning write down your car's odometer reading. Subtract the number you wrote down last New Year's and you have the total miles you drove for the year. That will help determine your auto deduction come April. If you didn't write down last year's number, you are now set for next year.
Second, pay any January business expenses you may have. Or buy the equipment that you need for your business today. Make a donation to your favorite charity. Any payments charged to your credit card today will be deductible on your 2011 tax returns.
Keep checking back to my blog as I will have helpful hints/rumor busters for your 2011 tax returns. As always, please do not hesitate to write or call if you have any questions. I am here to help.
Saturday, December 31, 2011
Saturday, December 3, 2011
Alternative Minimum Tax (AMT)
AMT affects an increasing number of taxpayers, especially in high tax states like California. AMT provides for a separate calculation of income tax liability by adding back to income certain common deductions, called "preference items". Common items such as state and property taxes, medical expenses, certain interest on lines-of-credit, business related items, large capital gains and employee business expenses are common preference items that can throw a taxpayer into AMT.
It is difficult to determine which combination of factors will make you subject to the AMT. But it is best to estimate these before the end of the year, since normal year end planning will change if AMT is rearing its ugly head. Please contact us to assist in determining if AMT will affect you before it is too late.
It is difficult to determine which combination of factors will make you subject to the AMT. But it is best to estimate these before the end of the year, since normal year end planning will change if AMT is rearing its ugly head. Please contact us to assist in determining if AMT will affect you before it is too late.
Tuesday, October 25, 2011
Financial Thoughts
Only 29% of parents describe themselves as excellent financial role models. 58% are saving less today for their children's future than 2 years ago. 31% have withdrawn from college savings accounts to pay current bills. This is a sad effect of current financial situations.
If you are one of these parents, don't dispare. Saving for future education is great if you have the resources. Otherwise, the "pay as you go" plan has worked for millions of people over the years. Somehow parents have found the cash flow to pay for education, weddings and other expenses as the need arises. While not the preferred method, this form of payment assesses the current opportunities with current cash availability. Necessity can assist in finding grants, scholarships and loans when needed.
As always, if you need assistance in budgeting and planning for future occurrences, please call or email. We are here to help.
If you are one of these parents, don't dispare. Saving for future education is great if you have the resources. Otherwise, the "pay as you go" plan has worked for millions of people over the years. Somehow parents have found the cash flow to pay for education, weddings and other expenses as the need arises. While not the preferred method, this form of payment assesses the current opportunities with current cash availability. Necessity can assist in finding grants, scholarships and loans when needed.
As always, if you need assistance in budgeting and planning for future occurrences, please call or email. We are here to help.
Saturday, October 15, 2011
Reducing Your Debt
There are various ways to tackle too much debt. But here are a few suggestions to get your started:
Understand your expenses - Produce a list of expenses. Then categorize them into fixed (mortgage, car payment, etc); Necessary but not fixed (utilities, phone, fuel); Not Necessary (clothes, dining out, etc.)
Create a budget - Include all items you just listed. Unlike government, you cannot exceed your income.
Lower expenses - Think about how to pay down more debt. Cut down on the Not Necessary items and put the extra to reducing debt.
Increase your income - although not easy, consider how to increase your take home pay. Consider raising your exemptions at work. This reduces the taxes taken out each paycheck. Use the extra cash to pay down debt, not to pay for increased expenses. DON'T SPEND THE EXTRA MONEY ON NOT NECESSARY ITEMS!
What not to do - Don't borrow from home equity or 401(k) to pay for short term items. It may seem easy and simple, but the long term effects are horrific.
The best debt-reduction move is to ask for help. Most lenders will work with you if you call them. Unlike a fine wine, problems don't get better with age. As always, we are there to help. Call or email us with questions.
Understand your expenses - Produce a list of expenses. Then categorize them into fixed (mortgage, car payment, etc); Necessary but not fixed (utilities, phone, fuel); Not Necessary (clothes, dining out, etc.)
Create a budget - Include all items you just listed. Unlike government, you cannot exceed your income.
Lower expenses - Think about how to pay down more debt. Cut down on the Not Necessary items and put the extra to reducing debt.
Increase your income - although not easy, consider how to increase your take home pay. Consider raising your exemptions at work. This reduces the taxes taken out each paycheck. Use the extra cash to pay down debt, not to pay for increased expenses. DON'T SPEND THE EXTRA MONEY ON NOT NECESSARY ITEMS!
What not to do - Don't borrow from home equity or 401(k) to pay for short term items. It may seem easy and simple, but the long term effects are horrific.
The best debt-reduction move is to ask for help. Most lenders will work with you if you call them. Unlike a fine wine, problems don't get better with age. As always, we are there to help. Call or email us with questions.
Friday, September 30, 2011
Goodbye 2011....
Today marks the end of 2011 for the Federal government. September 30 is the fiscal year end and tomorrow begins a new budget. Fortunately Congress was able to pass a budget for the new year....or at least a couple of weeks of it. They will begin again next week deciding how to spend money they don't have.
Speaking of money you don't have, almost time to start thinking about tax returns and year end planning. As we get closer to our year end, December 31, we will post different tried and true methods to reduce your tax bill next April. So stick around and we will talk soon...
Until then, enjoy the Fall and as always, call or email me at slux@southcountycpa.com if you have any questions. I am here to help...
Speaking of money you don't have, almost time to start thinking about tax returns and year end planning. As we get closer to our year end, December 31, we will post different tried and true methods to reduce your tax bill next April. So stick around and we will talk soon...
Until then, enjoy the Fall and as always, call or email me at slux@southcountycpa.com if you have any questions. I am here to help...
Sunday, April 24, 2011
Tax Cheating on the Rise
Another tax season has come and gone, but not without its scams. IRS reports that cheating was up 181% this year. Favorite scams: Deduction for prostitutes; Earned Income Credit fraud; deductions to charities that were never made and taking a tax credit for buying an energy efficient car that wasn't bought.
IRS is upping their automated review of returns using computers to match W-2's and 1099's. So if you didn't include one on your return, you will be getting a letter this summer!
If you didn't file, or do get a love letter, please do not hesitate to contact us. We are here to help.
IRS is upping their automated review of returns using computers to match W-2's and 1099's. So if you didn't include one on your return, you will be getting a letter this summer!
If you didn't file, or do get a love letter, please do not hesitate to contact us. We are here to help.
Thursday, April 14, 2011
So Who Pays The Tax Bill
The wealthy? The Middle Class? The poor? Who pays what?
Well here is the answer. But like all statistics, they lie! The wealthiest 1% of Americans paid 40% of the total taxes in 2007. But overall, the percentage of tax they paid was 29% of their income, down from 37% in 1979 and 30% in 2002. The Average American paid 20% in 2007, down from 22% in 1979. But the wealthy pay the most. Here is a chart that shows the spread.
Well here is the answer. But like all statistics, they lie! The wealthiest 1% of Americans paid 40% of the total taxes in 2007. But overall, the percentage of tax they paid was 29% of their income, down from 37% in 1979 and 30% in 2002. The Average American paid 20% in 2007, down from 22% in 1979. But the wealthy pay the most. Here is a chart that shows the spread.
As always, we are here to reduce your taxes. Do not hesitate to call at 949-683-8111 or email. Have a very happy Tax Day on Monday, 4/18.
Sunday, March 27, 2011
Know the Score on Credit
Your FICO score can save, or cost you, big time when you want to buy a car, a house or apply to a credit card. Some items that will affect your score:
- Closing existing cards can drop your score as much as 60 points for a year
- Using over 70% of your credit limit can cost you 50 points
- Go over your credit limit costs you 100 points
- Pulling a credit report cost 5 points
Most negative information remains on the report for seven years; bankruptcy for 10. Fixing the problem doesn't help either. If you went over the limit and then paid it down, the damage is done, and so is your FICO score.
FICO scores range from 300 to 850. Stay over 720 and you can control the financial world.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Tuesday, February 22, 2011
Earning Tax Free Money
You want to send $500 to Haiti Relief but don't have the extra money? Do it this way. Have a garage sale, unloading tchotchkes from your attic, and advertise that 100% of the proceeds will go to the worthy cause. If you haul in $490, that sum becomes, in effect, tax free income for your day of labor.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Monday, February 14, 2011
Average deductions
OK, so I am told all the time "Just take the average" for any deduction where my client has no idea how much they contributed or spent.
Now remember, just because these are the averages, it doesn't mean you get to deduct them automatically. Also, being below average is no guarantee you won't be audited. The correct amount to deduct is what you paid.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
So here are some "average" deductions based on income levels:
Now remember, just because these are the averages, it doesn't mean you get to deduct them automatically. Also, being below average is no guarantee you won't be audited. The correct amount to deduct is what you paid.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
So here are some "average" deductions based on income levels:
| Average Itemized Deductions | ||||
| Adjusted Gross Income | Medical Expenses | Taxes | Interest | Charitable Contributions |
| $15,000 to $30,000 | $7,074 | $3,147 | $9,245 | $2,189 |
| $30,000 to $50,000 | $6,153 | $3,830 | $9,055 | $2,189 |
| $50,000 to $100,000 | $7,102 | $6,050 | $10,659 | $2,693 |
| $100,000 to $200,000 | $9,269 | $10,798 | $13,734 | $3,757 |
| $200,000 to $250,000 | $21,554 | $18,164 | $18,570 | $5,895 |
| $250,000 or more | $37,143 | $50,267 | $27,865 | $20,930 |
| *Source: CCH, 2011 | ||||
Wednesday, February 2, 2011
Tax Myth #12 - Home Office Deduction
I use my home for business, so can I write it off?
Maybe. First, you must be self employed. It cannot be deducted as an employee business expense. Second, you must meet or deal with customers or vendors in the regular course of business. And Third, you must use a part of the home exclusively for business.
While this deduction is available, the IRS realizes that it is often misused and will increase the risk of audit by its inclusion. But if you qualify, you can save some bucks taking advantage of it.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Maybe. First, you must be self employed. It cannot be deducted as an employee business expense. Second, you must meet or deal with customers or vendors in the regular course of business. And Third, you must use a part of the home exclusively for business.
While this deduction is available, the IRS realizes that it is often misused and will increase the risk of audit by its inclusion. But if you qualify, you can save some bucks taking advantage of it.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Monday, January 31, 2011
Tax Myth #38 - Married Filing Jointly
I am married, so don't I have to file a joint return?
Not necessarily. Filing a joint return will usually result in lower taxes. But in specialized cases, filing two separate returns may result in a lower total tax. This option is available to every married couple on a year by year basis. So if one spouse has significant medical or employee business expenses, it may be beneficial. It doesn't happen often, but it only takes one year to save some money. We can run the numbers for you.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Not necessarily. Filing a joint return will usually result in lower taxes. But in specialized cases, filing two separate returns may result in a lower total tax. This option is available to every married couple on a year by year basis. So if one spouse has significant medical or employee business expenses, it may be beneficial. It doesn't happen often, but it only takes one year to save some money. We can run the numbers for you.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Friday, January 28, 2011
Head of Household Filing Status
We are all aware of the two basic filing statuses: single and married filing jointly. But what if you aren't married but maintain a home for other people? There is another choice for both federal and California - Head of Household. If you meet the requirements for HOH, using it will save you money!
To qualify for HOH, you need to have either a qualified child or other dependent.
To be a qualified child, your natural, adopted, step or grand child must be
To qualify for HOH, you need to have either a qualified child or other dependent.
To be a qualified child, your natural, adopted, step or grand child must be
- younger than 19 or 24 if a full time student, and
- a citizen or US, Mexico or Canada resident, and
- resided with you more than 1/2 of the year, and
- you provided more than 1/2 the support for the child.
Finally, if you maintained a household (paid for more than 1/2 of the expenses) for a parent that did not live with you during the year, you qualify for HOH status.
If you are currently single, qualifying for HOH status can save you as much as 30% off your total tax bill. We have a flowchart that details the items described here to provide you with the decision tree determination of HOH status. As always, please call (949-683-8111) or email us at info@southcountycpa.com if you have any questions. We are here to help.
Tuesday, January 25, 2011
Tax Myth #7 - Can I Deduct My Pet
I spend a fortune for my pet. Don't they qualify as a dependent?
While your pet is truly dependent on you, the IRS isn't as thoughtful. You cannot deduct Fido, Fluffy or Tweety as a dependent on your tax return. Additionally, in order to deduct a human dependent, you will need to record their social security number on the return.
When the IRS started requiring social security numbers on returns, the number of dependents claimed dropped by over 9 million from the prior year! Over 10,000 returns showed greater than 10 fewer dependents from the prior year.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
While your pet is truly dependent on you, the IRS isn't as thoughtful. You cannot deduct Fido, Fluffy or Tweety as a dependent on your tax return. Additionally, in order to deduct a human dependent, you will need to record their social security number on the return.
When the IRS started requiring social security numbers on returns, the number of dependents claimed dropped by over 9 million from the prior year! Over 10,000 returns showed greater than 10 fewer dependents from the prior year.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Saturday, January 22, 2011
Tax Myth #22 - Gambling Losses
Can't I deduct my gambling losses?
You can only deduct gambling losses to the extent of gambling winnings. And it doesn't matter what type of gaming caused the income or loss. For example, you won $1,000 playing the lottery, lost $300 at the track and another $900 in Vegas, you can deduct $1,000 of the $1,200 you lost since you are reporting the $1,000 won in the lottery.
Gambling losses are a miscellaneous itemized deduction, so you only get to deduct them if you itemize your deductions. Naturally, you always get to report the winnings!!!
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
You can only deduct gambling losses to the extent of gambling winnings. And it doesn't matter what type of gaming caused the income or loss. For example, you won $1,000 playing the lottery, lost $300 at the track and another $900 in Vegas, you can deduct $1,000 of the $1,200 you lost since you are reporting the $1,000 won in the lottery.
Gambling losses are a miscellaneous itemized deduction, so you only get to deduct them if you itemize your deductions. Naturally, you always get to report the winnings!!!
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Wednesday, January 19, 2011
Tax Myth #6 - Income Taxes Are Illegal
Doesn't the 5th Amendment make income taxes illegal?
Tried in court and answered many times. Income taxes are legal by the 16th Amendment to the Constitution. The 5th Amendment provides against self incrimination. Courts have ruled that telling the government how much you made and calculating how much you owe isn't incriminating. Justice Oliver Wendall Holmes wrote "Taxes are what we pay for civilized society." While he also wrote that taxes were every American's duty, it was every American's obligation to pay the least amount possible!
We can help fulfill your obligation. Please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Tried in court and answered many times. Income taxes are legal by the 16th Amendment to the Constitution. The 5th Amendment provides against self incrimination. Courts have ruled that telling the government how much you made and calculating how much you owe isn't incriminating. Justice Oliver Wendall Holmes wrote "Taxes are what we pay for civilized society." While he also wrote that taxes were every American's duty, it was every American's obligation to pay the least amount possible!
We can help fulfill your obligation. Please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Sunday, January 16, 2011
Tax Myth #13 - Sales Tax Deduction
Can't I deduct the sales tax I paid for my new car?
Nope. Up until 2009, you had the option of deducting a standard amount of sales tax or the state income taxes you paid. This is no longer the case. Sales taxes are no longer deductible. Bummer....
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Nope. Up until 2009, you had the option of deducting a standard amount of sales tax or the state income taxes you paid. This is no longer the case. Sales taxes are no longer deductible. Bummer....
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Thursday, January 13, 2011
Tax Myth #5 - Working Child Deduction
My child is working so I cannot claim them as a dependent?
Not so fast. While it is true your child only gets one exemption, just because he/she is working doesn't mean you don't get it. If you still provide over 1/2 of their support, you are eligible to take the deduction. The question then becomes who saves the most money using the deduction. That is where we can help!!!
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Not so fast. While it is true your child only gets one exemption, just because he/she is working doesn't mean you don't get it. If you still provide over 1/2 of their support, you are eligible to take the deduction. The question then becomes who saves the most money using the deduction. That is where we can help!!!
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Sunday, January 9, 2011
Tax Myth #4 - The Wealthy Don't Pay Taxes
The rich in America use tax breaks to avoid taxes, don't they???
Yes and no. Although the wealthiest Americans take advantage of sophisticated tax planning services to reduce their taxes, they still pay a bunch. 99.7% of Americans making over $1 million paid federal income taxes averaging 27% of their earnings last year. The average American paid 18% of their income in federal income taxes.
We can help you reduce what you pay. As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Yes and no. Although the wealthiest Americans take advantage of sophisticated tax planning services to reduce their taxes, they still pay a bunch. 99.7% of Americans making over $1 million paid federal income taxes averaging 27% of their earnings last year. The average American paid 18% of their income in federal income taxes.
We can help you reduce what you pay. As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Saturday, January 8, 2011
Tuition Deduction or Credit
If you paid college tuition for yourself, your spouse or anyone who claim as a dependent, you may be eligible to deduct up to $4,000 of those expenses, even if you don't itemize your deductions. The $4,000 limit is decreased if your income is over $65,000 if single or $130,000 if you are married.
The amount of expenses includes tuition and fees paid to college institutions. It does not include books, transportation and living expenses while at college.
As an alternative to the Tuition Deduction, the American Opportunity Tax Credit allows a credit of up to $2,500 for the first four years of college. As with the Tuition Deduction, the credit is reduced if your income is over $80,000 ($160,000 MFJ). If you don't owe any taxes this year, 40% of the credit (up to $1,000) is refundable, meaning that you can get the IRS to send you a check even if you didn't send them any money all year.
As always, please call (949-683-8111) or email us at info@southcountycpa.com if you have any questions. We are here to help.
The amount of expenses includes tuition and fees paid to college institutions. It does not include books, transportation and living expenses while at college.
As an alternative to the Tuition Deduction, the American Opportunity Tax Credit allows a credit of up to $2,500 for the first four years of college. As with the Tuition Deduction, the credit is reduced if your income is over $80,000 ($160,000 MFJ). If you don't owe any taxes this year, 40% of the credit (up to $1,000) is refundable, meaning that you can get the IRS to send you a check even if you didn't send them any money all year.
As always, please call (949-683-8111) or email us at info@southcountycpa.com if you have any questions. We are here to help.
Friday, January 7, 2011
Tax Myth #14 - Refunds Are Good
Should I increase my withholding to get a bigger refund?
Only if you think you cannot control your spending. By allowing the IRS to collect more from each paycheck, you are making an interest free loan to Uncle Sam. Ideally, you should only pay what you owe in withholding during the year and possible write a small check to the IRS in April. That allows you to bank the extra money and earn some interest on it. Even a small amount is more that you get from the IRS.
You can adjust your withholding on form W-4 that your employer provides to you. As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Only if you think you cannot control your spending. By allowing the IRS to collect more from each paycheck, you are making an interest free loan to Uncle Sam. Ideally, you should only pay what you owe in withholding during the year and possible write a small check to the IRS in April. That allows you to bank the extra money and earn some interest on it. Even a small amount is more that you get from the IRS.
You can adjust your withholding on form W-4 that your employer provides to you. As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Thursday, January 6, 2011
Tax Myth #2 - E-Filed Returns Are Look At Closer
Should I file on paper since the IRS won't look at it?
The obvious answer is no. But surprisingly, that wasn't true seven years ago. As the IRS began receiving returns electronically, they had to scrutinize these returns more closely to make sure they got all the information correctly. By doing this, they found more errors and selected more of these returns for audit. The CPA community complained about this procedure and got the IRS to stop looking at the returns. As of today, you have no greater risk of audit or correction filing electronically or on paper. But you still get your refund up to a month quicker filing electronically.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
The obvious answer is no. But surprisingly, that wasn't true seven years ago. As the IRS began receiving returns electronically, they had to scrutinize these returns more closely to make sure they got all the information correctly. By doing this, they found more errors and selected more of these returns for audit. The CPA community complained about this procedure and got the IRS to stop looking at the returns. As of today, you have no greater risk of audit or correction filing electronically or on paper. But you still get your refund up to a month quicker filing electronically.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Wednesday, January 5, 2011
Tax Myth #1 - Audit Risk and Filing Date
Will extending my tax return increase the risk of audit?
There are three answers to this one. No, No and NO!!!
The IRS selects returns for audit during the following year. For instance, the 2009 returns were all filed by October 15, 2010. The IRS will begin selecting 2009 returns to audit in May 2012. The filing date means absolutely nothing to the selection process. It is not a selection factor in determining which return gets selected.
Extensions do give the IRS more time to audit as well as other advantages. As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
There are three answers to this one. No, No and NO!!!
The IRS selects returns for audit during the following year. For instance, the 2009 returns were all filed by October 15, 2010. The IRS will begin selecting 2009 returns to audit in May 2012. The filing date means absolutely nothing to the selection process. It is not a selection factor in determining which return gets selected.
Extensions do give the IRS more time to audit as well as other advantages. As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Tuesday, January 4, 2011
Tax Myth #11 - Equipment For Work
Can I deduct my phone and computer for work?
If you use the computer and phone more than 50% for work, then yes. You will get to write off the business percentage on your tax return. For instance, if you have a $1,000 computer and use it 55% for business, you are entitled to write off $550 of the computer cost. Same is true for your phone.
If the equipment qualifies for business use, then you can also expense the costs associated with the use of the item. For a phone, the cost of the service and calls made for business. For a computer, the software and internet charges for the business use.
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Monday, January 3, 2011
Tax Myth #2 - All Business Expenses Are Deductible
What business expenses are deductible???
The answer is all of them. The requirement for a deduction is that the expense be "necessary" and "ordinary". This means that the expense is needed in the ordinary operation of the business.
If you have your own business, rental property or expenses as an employee, keep track of them so you can deduct them on your tax return. They are all deductible!!!
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
The answer is all of them. The requirement for a deduction is that the expense be "necessary" and "ordinary". This means that the expense is needed in the ordinary operation of the business.
If you have your own business, rental property or expenses as an employee, keep track of them so you can deduct them on your tax return. They are all deductible!!!
As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Sunday, January 2, 2011
Tax Myth #10 - Charitable Contributions
Can't I just deduct the normal amount for my return?
Can't tell you how often I am asked this question. Or the other answer when I ask clients how much they contributed: "About the same as last year." Neither answer works!
You need to have receipts for all contributions. You can no longer count the $10 each week at church. You must get a statement from the charity indicating how much you contributed.
You can deduct up to 50% of your income, so if you have the receipts, take the deduction. But remember, if you cannot produce the receipt, the IRS may eliminate your deduction. As always, please call (949) 683-8111 or email us at info@southcountycpa.com if you have any questions. We are here to help.
Saturday, January 1, 2011
Miscellaneous Tax Forms In Your Mailbox
You will soon be bombarded with forms and notices in the mail for your tax return. Don't get flustered over the paperwork. It is all required information being sent to you to assist in your tax return preparation. Let's go over a few of the basic forms for most of you.
First there is the W-2. This is a summary of how much money you made and how much was deducted during 2010. Your employer is required to provide this to you before January 31st. Fortunately, the form hasn't changed from last year, so it should look familiar.
Next is the 1099. There are several variations of this form, depending on why it is being completed. Each is designed to report income that has been paid to you during the year. The most common is the 1099-INT, which reports how much (or how little!) interest you received. Other 1099 forms include the 1099-S for sale of real estate, 1099-B for stock sales and the 1099-DIV for dividend payments.
Form 1098 is used to report how much you paid for certain items, primarily interest and taxes on real estate. The form show how much interest, point or mortgage insurance you paid, as well as impounded taxes and insurance.
All these forms are useful in helping you gather the information needed to prepare your return. As always, if you have any questions, please do not hesitate to call or email us with questions. We are always here to help.
First there is the W-2. This is a summary of how much money you made and how much was deducted during 2010. Your employer is required to provide this to you before January 31st. Fortunately, the form hasn't changed from last year, so it should look familiar.
Next is the 1099. There are several variations of this form, depending on why it is being completed. Each is designed to report income that has been paid to you during the year. The most common is the 1099-INT, which reports how much (or how little!) interest you received. Other 1099 forms include the 1099-S for sale of real estate, 1099-B for stock sales and the 1099-DIV for dividend payments.
Form 1098 is used to report how much you paid for certain items, primarily interest and taxes on real estate. The form show how much interest, point or mortgage insurance you paid, as well as impounded taxes and insurance.
All these forms are useful in helping you gather the information needed to prepare your return. As always, if you have any questions, please do not hesitate to call or email us with questions. We are always here to help.
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