When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. Your donations could add up to a sizeable tax deduction if you itemize on IRS Form 1040, Schedule A.
Here are a few tips to ensure your contributions pay off on your tax return:
Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates.
You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance.
If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
Donations of stock or other property are usually valued at the fair market value of the property.
Special rules apply to donation of vehicles.
Clothing and household items donated must generally be in good used condition or better to be deductible.
Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution.
To claim a deduction for contributions of cash or property equaling $250 or more you must obtain a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document from the organization may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
If you claim a deduction of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return.
Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.
Contributions made for relief efforts in a Midwest disaster area receive special benefits. For more information, see Publication 4492-B, Information for Affected Taxpayers in the Midwest Disaster Areas.
Search for Charities or download Publication 78, Cumulative List of Organizations
Publication 526, Charitable Contributions (PDF 178K)
Publication 561, Determining the Value of Donated Property (PDF 101K)
Form 1040, U.S. Individual Income Tax Return (PDF 176K)
Schedule A, Itemized Deductions (PDF 116K)
Form 8283, Noncash Charitable Contributions (PDF)
Instructions for Form 8283, Noncash Charitable Contributions (PDF)
Showing posts with label tax deductions. Show all posts
Showing posts with label tax deductions. Show all posts
Thursday, March 26, 2009
Thursday, March 12, 2009
Child and Dependent Care Credit - What You Should Know
If you paid someone to care for a child, spouse, or dependent, you may be able to reduce your tax by claiming the Child and Dependent Care Credit on your federal income tax return. Below are the top ten things you need to know about claiming a credit for child and dependent care expenses.
The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child under age 13. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
The care must have been provided so you – and your spouse if you are married – could work or look for work.
You – and your spouse if you are married – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.
The payments for care cannot be paid to your spouse, to someone you can claim as your dependent on your return, or to your child who is under age 19, even if he or she is not your dependent. You must identify the care provider on your tax return.
Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
The qualifying person must have lived with you for more than half of 2008.
The credit can be up to 35 percent of your qualifying expenses, depending upon your income.
For 2008, you may use up to $3,000 of the expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals.
The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from your income.
If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. For information, see Publication 926, Household Employer's Tax Guide.
Publication 503, Child and Dependent Care Expenses (PDF 167K)
Form W-10, Dependent Care Provider’s Identification and Certification (PDF 31K)
Form 2441, Child and Dependent Care Expenses (PDF)
Form 2441 Instructions (PDF 32K)
Publication 17, Your Federal Income Tax (PDF 2,075K)
Tax Topic 602
The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child under age 13. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
The care must have been provided so you – and your spouse if you are married – could work or look for work.
You – and your spouse if you are married – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or they were physically or mentally unable to care for themselves.
The payments for care cannot be paid to your spouse, to someone you can claim as your dependent on your return, or to your child who is under age 19, even if he or she is not your dependent. You must identify the care provider on your tax return.
Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
The qualifying person must have lived with you for more than half of 2008.
The credit can be up to 35 percent of your qualifying expenses, depending upon your income.
For 2008, you may use up to $3,000 of the expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals.
The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you exclude from your income.
If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer. If you are a household employer, you may have to withhold and pay social security and Medicare tax and pay federal unemployment tax. For information, see Publication 926, Household Employer's Tax Guide.
Publication 503, Child and Dependent Care Expenses (PDF 167K)
Form W-10, Dependent Care Provider’s Identification and Certification (PDF 31K)
Form 2441, Child and Dependent Care Expenses (PDF)
Form 2441 Instructions (PDF 32K)
Publication 17, Your Federal Income Tax (PDF 2,075K)
Tax Topic 602
Monday, August 4, 2008
Qualified Performing Artists Tax Deductions
Above-the-line tax deduction (you don't need to itemize).
If you are a qualified performing artist or other professional, and you paid for job-related expenses out of your own pocket, then you can claim those expenses as a tax deduction. Normally job-related expenses are a miscellaneous itemized tax deduction, subject to the 2% floor. If you qualify, claiming the qualified performing artist deduction will provide a bigger tax break.
The following professions qualify for the above-the-line deduction of job-related expenses:
Performing artists who worked for two or more employers during the year,
National Guard or Reserve member, or
Fee-based government officials.
You provided services in the performing arts for two or more employers, receiving at least $200 or more in wages from each employer, your job-related expenses are more than 10% of your income from your performing artist jobs, and you have adjusted gross income of $16,000 or less (without regard to this deduction). Your filing status cannot be married filing separately.
You are a member of the Reserve for the Air Force, Army, Coast Guard, Marine Corps, or Navy, Army National Guard, Air National Guard, or Public Health Service Reserve Corps. You can deduct expenses for travelling more than 100 miles from your main home. Your deductible expenses are limited to the federal per diem rates for the city you are travelling to.
You are a government official who is compensated entirely or partly on a fee basis. Your job-related expenses are deductible.
You claim your job-related expenses tax deduction on Form 2106 or Form 2106-EZ. Normally, these expenses are transferred to Schedule A. However, if you qualify, these expenses are transferred to Form 1040 Line 24.
If you are a qualified performing artist or other professional, and you paid for job-related expenses out of your own pocket, then you can claim those expenses as a tax deduction. Normally job-related expenses are a miscellaneous itemized tax deduction, subject to the 2% floor. If you qualify, claiming the qualified performing artist deduction will provide a bigger tax break.
The following professions qualify for the above-the-line deduction of job-related expenses:
Performing artists who worked for two or more employers during the year,
National Guard or Reserve member, or
Fee-based government officials.
You provided services in the performing arts for two or more employers, receiving at least $200 or more in wages from each employer, your job-related expenses are more than 10% of your income from your performing artist jobs, and you have adjusted gross income of $16,000 or less (without regard to this deduction). Your filing status cannot be married filing separately.
You are a member of the Reserve for the Air Force, Army, Coast Guard, Marine Corps, or Navy, Army National Guard, Air National Guard, or Public Health Service Reserve Corps. You can deduct expenses for travelling more than 100 miles from your main home. Your deductible expenses are limited to the federal per diem rates for the city you are travelling to.
You are a government official who is compensated entirely or partly on a fee basis. Your job-related expenses are deductible.
You claim your job-related expenses tax deduction on Form 2106 or Form 2106-EZ. Normally, these expenses are transferred to Schedule A. However, if you qualify, these expenses are transferred to Form 1040 Line 24.
If you do not meet all of the above requirements, you must deduct your expenses as a miscellaneous itemized deduction subject to the 2% limit. (Miscellaneous Deductions, Publication 529)
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