West Tax|Western Tax and financial Information

Many employers continue to pay employees’ full salary while they serve on jury duty, and some require the employees to turn over their jury fees to the company coffers. The only problem is that the IRS demands that you report those fees as taxable income. To even things out, you get to deduct the amount paid to your employer. But how do you do it\/ there’s no line on form 1040 labeled “jury fees”. Instead the write-off goes on line 36, which purports to be for simply totaling upo the deduction that get their own lines. Add your jury fees to the total of your other write-offs, and write “jury pay” on the dotted line.

14.  American Opportunity Credit

This tax credit, is available for up to $2,500 of college tuition & related expenses paid during the year. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less $160,000, or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above those levels. This credit is juicer than the old hope credit, it has higher income limits and bigger tax breaks, and it covers all four years of college. And if the credit exceeds your tax liability, regular and AMT, it is partially refundable.

15.  Making Work Pay Credit

You’ve probably been enjoying the fruits of this credit via reduced payroll tax withholding throughout the year. But to look in your savings, you’ll need to actually claim the credit on your 2010 tax return. This is by reducing your tax bill by $400 if you’re single or $800 if you’re married and file a joint return. You’ll use schedule M to do so. The credit is equal to 6.2% of your earned income, capped at $400 or $800. For single filers, it starts phasing out at $75,000 of adjusted gross income and drives up at $95,000. The phase-out zone for couples is $150,000 to $190,000.

16.  Credit For Energy-Saving Home Improvements

You can claim a tax credit equal to 30% of the cost of energy-saving home improvements up to a maximum of $1,500. This cap applies to both 2009 & 2010 combined, so if you claimed the maximum $1,500 in 2009, you don’t get another crack at it for 2010. The credit applies to biomass fuel stoves, qualifying skylights, windows and outside doors and high-efficiency furnaces, water heaters and central air conditioners. For 2011, this credit goes back to pre-2009 limits. For example, $500 maximum credit for all years with no more than $200 for windows. There’s also no dollar limit on the separate credit for homeowners who install qualified residential alternative energy equipment such as hot water heaters, geothermal heat pumps and wind turbines. Your credit can be 30% of the total cost, including labor, of such systems installed through 2016.

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9.  Child-Care Credit

It’s easy top overlook the child-care credit if you pay your child-care bills through reimbursement account at work. Although only $5,000 of such expenses can be paid through a tax-favored reimbursement account up to, for the care of two or more children, can qualify for the credit. So, if you run the maximum allowed by your work plan, you can claim the credit on as much $1,000 of additional expenses you pay for work-related child care. That would cut your tax bill by at least $200.

10.  Estate Tax on Income in Respect of a Decedent

It’s all about the IRA, or the individual retirement arrangement. A decedent IRA is an IRA, that was owned by a person who has died from which funds are distributed to its beneficiaries. There is a big tax deduction if you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax. Basically, you get an income tax deduction for the amount of estate tax paid on the IRA assets you received. Let’s say you inherited a $100,000 IRA, and the fact that the money was included in your benefactor’s estate added $45,000 to the estate-tax bill. You got to deduct that $45,000 on your tax returns as you withdraw the money from the IRA. If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized deduction on schedule A. That would save you $6,300 in the 28% bracket.

11.   State Tax Paid Last Spring

Did you owe tax when you filed your 2009 state tax return in the spring of 2010? Then, for goodness sake, remember to include that amount with your state-tax deduction on your 2010 return along with state income taxes withheld from your paychecks or paid via quarterly estimated payments.

12.   Refinancing Points

When you buy a house, you get to deduct points paid to get your mortgage in one fell swoop. When you refinance a mortgage, though, you have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points a year if it’s a 30-year mortgage. That’s $33 a year for each $1,000 of points you paid. Not much, maybe, but don’t throw it away. Even more important, in year you pay off the loan you get to deduct all as-yet-undeducted points. That’s because you sell the house or refinance again. There’s one exception to this sweet rule. If you refinance a refinanced loan with the same lender, you add the points paid on the latest deal to the leftovers from the previous refinancing and deduct the amount gradually over the life of the new loan.

5. Job-Hunting Costs
If you’re among the millions of unemployed americans who were looking for a job in 2010, keep track of your job-search expenses. If you’re looking for a position in the same line work, you can deduct job-hunting costs as miscellaneous expenses if you itemize, but only the extent that the total of your miscellaneous itemized deductions exceed 2% of your adjusted gross income. Job-hunting expenses incurred while looking for your first job don’t qualify. Deductible job-search costs include, but aren’t limited to: food, lodging & transportation if your search takes you away from home overnights, cab fares, employment agency fees, costs of printing resume, business cards, postage, and advertising.

6. Moving Expenses to Take Your First Job
As we just mentioned, job-hunting expenses incurred while looking for your first job are not deductible. But, moving expenses to get to that position are. And you get this write-off even if you don’t itemize. To qualify for the deduction, your first job must be at least 50 miles away from your old home. If you qualify, you can deduct the cost of getting yourself & your household goods to the new area, including 16.5 cents per mile for driving your own vehicle for a 2010 move, plus parking fees &tolls.

7. Military Reservist’s Travel Expenses
Members of the national guard or military reserve may tap a deduction for travel expenses to drills or meetings. To qualify, you must travel more than 100 miles from home & be away from home overnight. If you qualify, you can deduct the cost of your meals plus 55 cents per mile for driving your own car to get to and from 2010 drills. In any event, add parking fees or tolls. You get this deduction regardless of whether you itemize.

8. Health Insurance Deduction to Reduce Self-Employment Tax
Business owners have always been allowed to deduct health insurance premiums for themselves & their family. This is in computing adjusted gross income on the front page of form 1040. For 2010, they can also deduct the cost of those health insurance premiums in calculating self-employment tax on schedule SE. The IRS has hidden this write-off on line 3 of schedule SE. On that line, you are told to add your self-employment income from lines 1&2 subtract the amount claimed, on line 29, of form 1040, your health insurance premiums and enter the net amount on line 3.

The most overlooked tax deduction (part 1 of 4)

Years ago, the fellow who was running the IRS, told Kiplinger’s Personal Finance magazine that he figured millions of taxpayers overpaid their taxes every year by overlooking just one of the tax deductions. With that, we are going to discuss the most-overlooked Tax Deductions for this series of shows. Cut your tax bill to the bone by claiming all the breaks you deserve. Including some you may have forgotten or never even knew about. Let’s take the first 4 on Most-Overlooked Tax Deductions.

1. State Sales Taxes
This write-off makes sense primarily for those who live in states that do not impose an income tax. You must choose between deducting state and local income taxes or state and local sales taxes. For most citizens of income-tax states, the income-tax deduction is a better deal. If you purchased a vehicle, boat, airplane or even home-building materials, you get to add the state sales tax you paid to the amount shown in IRS tables for your state, to the extent the sales tax rate you paid doesn’t exceed the state’s general sales tax rate.

2. Reinvested Dividends
If, like most investors, you have mutual-fund dividends automatically invested in extra shares, you must remember that each reinvestment increases your “tax basis” in the fund. That, in turn, reduces the taxable capital gain when you redeem shares. Forgetting to include the reinvested dividends in your basis that which you subtract from the sale proceeds to pinpoint your gain, means overpaying your tax.

3. Out-of-Pocket Charitable Deductions
You can write off out-of-pocket costs incurred while doing good works. The money you spend on ingredients for casseroles you prepared for a soup kitchen, for example. Or on stamps you buy for your school’s fund-raiser counts as a charitable contribution. And also, if you drove your car for charity in 2010, remember to deduct 14 cents per mile.

4. Student- Loan Interest Paid By Parents
Generally, you can only deduct mortgage or student-loan interest if you are legally required to repay the debt. But if parents pay back a child’s student loan, the IRS treats it as though the money was given to the child, who then paid the debt. A child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student-loan interest paid by parents. And the child doesn’t have to itemize to use this money-saver.

Filing an Extension for Filing Taxes

Can make the April 18 tax filing deadline and need more time to file your tax return? You can get an automatic six month extension of time to file from the IRS. Today, let us examine “six important things you need to know about filing an extension”:

1. File on-time even if you can’t pay. If your return is completed but you are unable to pay the full amount of tax due, do not request an extension time. File your return on-time and pay as much as you can. The IRS will send you a bill or notice for the balance due. The apply online for a payment agreement, go to the IRS website at www.irs.gov and click “apply for an Online Payment Agreement (OPA)” at the left side of the page under online services. If you are unable to make payments, call the IRS at 800-829-1040 to discuss your options.
2. Extra time to file an extension will give you extra time to get your paperwork to the IRS. But it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the april 18 deadline, plus you may owe penalties.
3. Form to file request an extension to file by submitting form 4868, which is the application for automatic extension of time to file US individual income tax return to the IRS by april 18, or make an extension-related electronic credit card payment. For more information about extension-related credit card payments, see form 4868.
4. E-file extension. You can e-file an extension request using tax preparation software with your own computer or by going to a tax prepare who has the software. The IRS will acknowledge receipt of the extension request if you file by computer.
5. Traditional free file and free file fillable forms you can use both free file  options to file an extension. Access the free file page at www.irs.gov.
6. Electronic funds withdrawal if you ask for an extension via computer, you can also choose to pay any expected balance due by authorizing an electronic funds withdrawal from a checking or savings account. You will need the appropriate bank routing and account numbers. For information about these and other methods of payment, visit the IRS website at www.irs.gov or call 800-TAX-1040 (800-829-1040).

(continued from How Getting Married Affects Your Taxes)

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In contrast, if you file separately, you have to liability for your spouse’s tax screw-ups or intentional misdeeds. Bottom line that if you have doubts about your new spouse’s financial ethics in general and their attitude about paying taxes in particular, i suggest you to filing separately until those doubts are completely dispelled. Although your tax bill might be somewhat higher than if you file jointly, it could be a small price to pay for “insurance” against the joint-and-several liability threat.

Will you pay the marriage penalty or collect the marriage bonus? You’re undoubtedly heard about the tax penalty on marriage. It causes some (but not all) married joint-filing couples to owe more federal income tax than if they had remained single. The reason is because aat higher income levels, the tax rate brackets for joint filers are not twice as wide as the rate brackets for singles. For example, the 28% rate bracket for singles starts at $82,400 of taxable income (for 2010). For married joint-filing couples, the 28% bracket starts at $R137,300. If you and your spouse each have $80,000 of taxable income, you’ll get socked with a $681 marriage penalty because $22,700 of your combined income falls into the 28% rate bracket. If you stayed single, none of your income would be taxed at more than 25%.

On other hand, many married couples actually collect a tax bonus from being married. If one spouse earns most or all of the taxable income, it’s highly likely taht filing jointly will reduce your tax bill, the marriage bonus. Bottom line that if you and your spouse both earn healthy and fairy equal incomes, you’ll likely fall victim to the marriage penalty. If not, you’ll likely collect the marriage bonus.

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Today let us learn “how getting married affects your taxes”. When you get married, your tax situation changes, either for better or for worse, and there are decisions to make regarding how the two of you should file. Here are the most important things to know.

First, married at year-end means married for the whole year. Your marital status on December 31 determines yyour tax filing options for the entire year. If you’re married at year-end, you have only two choices: [1] file jointly with your new spouse, or; [2] use married filing separate status for a separate return based on your income and your deductions and credits. Most married couples file jointly. It’s because it is simpler. You have to file only one form 1040, and you don’t have to worry about figuring out which income, deduction and tax credit  items belong to which spouse. Other things being equal, simple is good. Besides, it’s often cheaper too. That’s because using married-filing-separate status makes you ineligible for some potentially valuable tax breaks, such as the child-care credit and the two higher-education credits. Therefore, filing two separate returns often results in a bigger combined tax bill than filing one joint return.

Second, if you file jointly, you’re on the hook for your spouse’s tax misdeeds. Despite the preceding advantages, filing jointly is not a no-brainer for one big reason. For any year that you file a joint return, you’re generally jointly and severally liable for any federal income tax underpayments and penalties, caused by your new spouse’s unintentional tax errors or omissions or deliberate tax misdeeds. Joint and several liability means the IRS can come after you for tax underpayments and penalties, if collecting from your spouse proves to be difficult or impossible. They can even come after you long after you’ve become divorced. However, if you can prove you didn’t know anything about your spouse’s tax failings, had no reason to know and did not personally benefit, then you can try to claim an exemption from the joint-and-several-liability rule under the so-called innocent spouse provisions. This is easier said than done.

(continued to How Getting Married Affects Your Taxes (part 2))

continued from (standard, or itemized tax deduction? (part 1)

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So if all those receipts you stashed last year, in the hopes of turning them into tax breaks add up to less than your standard deduction amount, throw them away. There’s no need to waste your time filling out extra forms. But individuals who spend a lot on medical care, mortgagae interest, state and local taxes, charitable contributions or a variety of miscellaneous items generally are better off itemizing. Even purchases might help out some fillers at tax time this year, thanks to the deduction for state sales tax paid. When all of this expenditures exceed the standard deduction, you’ll save on your taxes by filling out schedule “A” along with your 1040.

Now let’s see what itemizing ground rules mean. Last 2010, taxpayers who plan to itemize was not able to do it early; they’ll have to wait for the IRS to reprogram its computers to reflect the new tax law enacted in mid-December of 2010. When you do itemize, there are a few things to keep in mind. First, not every dollar you spend can be subtracted from your income. In the medical category, only expenses that exceed 7.5% of your adjusted groos income can be deducted. If you didn’t spend that much, then none of your costs are deductible. You have to reach a 2% of income threshold before you can use miscellaneous deductions, such as unreimbursed job expenses and invesment and tax-preparation costs. There also are restrictions on how much in casualty losses you can deduct, as well as limits on the deductibility of very large charitable contribution amounts.

Now let’s see how filing status affects figures. Filing status sometimes affects your deduction method and amount. Married couples who file separately, for example, must work together when it comes to deciding which deduction route to take. Even though each partner will fill out a separate return, if one spouse decides to itemize, the other must do so, too. Similarly, if someone claims you as an exemption on his tax return, the amount of the standard deduction you can take on your own return may be limited. Finally, your deduction decision isn’t a lifelong commitment. As long as you meet the other guidelines discussed above, you can claim the standard deduction one year and itemize the next. Again, use the deduction method that gives you the lowest tax bill.

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In this opportunity, let me help you decide between, “standard, or itemized tax deduction?”. Deductions reduce your taxable income. Less income means a smaller tax bill. What’s the best way to reach the smallest possible taxable income level? Is it should be with a standard or itemized deduction? Well, it depends on your personal circumstances.

The Internal Revenue Service (IRS) says most taxpayers use the standard deduction. The amount is different for each filing status and is higher for blind taxpayers and thse who are ages 65 or older. The amounts are also adjusted for inflation each year.

When can we say that standard deduction amounts has increased? Married couples who’ve been submitting joint returns for a while, will notice their standard deduction amount has jumped sustantially in recent filing years. They can thank inflation adjustments, as well as tax law changes in place through 2012, that are designed to help ease the marriage penalty. And some older and visually impaired taxpayers may be able to cut their tax bills with even larger standard deduction amounts by simply checking a couple of boxes on their tax returns. That means the standard deduction might now be appealing to even more taxpayers. Remember, you always want to use the deduction method that gives you the biggest tax advantage.

continue to standard, or itemized tax deduction? (part 2)

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Did you know that practicing tax certificates in tax deed is so safe? The government allows you to use you IRA in the retirement plan money without any tax penalties. Every years, millions of properties are being sold in the form of liens in deed. You don’t have to have thousands to have a chance. A link at least cost us $ 50, but win you a property worth $ 50,000. Over 5 billions dollars of property tax are sold each year. Large banks of the biggest investors is in this type of invesment , because the return can be as high as 18%.

So, if you asked most people, very few of them know that this kind of the sort invesment is even exist. It’s not well published and people who doing it are in a competition. With 27 states and 30,000 counties, conducting sales and auctions of taxes, there’s a plenty of reason for you to get involved. When someones tells you that you can get a home just by paying back taxes, it’s mean that you just pay 2% of the total assessed value of that property.

As i mentioned earlier, millions of liens are being sold in various county auctions across the country. Not all of that property are worth paying taxes. A smart invesment one is whose done researches, is pro due to attending this sales and know the worths of the particular real estate. In recent years, tax sales are moved online, but becoming so competitive and confusing. It is highly and likely for individual investors to get their hands to get a property on the high interest rate.