Posts Tagged ‘Itemized deduction’

Articles

Year End Charity Giving Tips from the IRS

In Accounting & Finances,Business,Family,Taxes on January 16, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900432375Happy New Year!  But Wait! 

Do not close the book just yet on year 2012…

Year 2012 is past us and hopefully you rang in the new year with a bang. Although the party is over, you can ensure you get more bang for every buck or item you donated in 2012 by reviewing these tips about year-end charity donations
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Contributions are tax deductible in the year made. As long as the donation was submitted before the end of 2012, it can be deducted for 2012 – even the check hasn’t been cashed or the credit card bill paid yet. However, take my word for it, the IRS won’t just take your word for charitable acts. To deduct monetary donations, you must have a bank record or written document from the charity with the name of the charity, the contribution amount, and the date.
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Also be aware that deductible donations must be made to “qualified” organizations. Only churches, synagogues, temples, mosques, government agencies, and anything on the Exempt Organizations Select Check have the IRS’ seal of approval. So although you might have splurged on gifts for yourself, you still don’t count as a qualified organization – no matter how often you call yourself a charity case.
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MH900044904Maybe you couldn’t spare some change and instead donated clothing or household items to a charity. In general, those items must have been in good used condition or better in order to be deductible. That means the bag of ratty old pajamas you left at the Salvation Army drop site probably can’t be deducted. And if you can’t get a receipt, at least keep a detailed written record of every donation.

MH900297557Remember that individuals can only claim deductions for charitable contributions if they itemize their deductions on Form 1040 Schedule A. That form will help you figure out whether itemizing is better than using a short form (Form 1040A and 1040EZ) to claim the standard deduction. Basically, you’ll have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Of course, whether or not you end up deducting your donations, giving is something you should do year-round. 

Remember the old saying….”Spend a little, Save a little, and Give a little…”

On the Money,  Sufen Wang,  Wang Solutions

Articles

Standard Deduction vs. Itemized:

In Accounting & Finances,Business,Taxes on April 11, 2012 by Sufen Wang Tagged: , , , , , , ,

Find Your Perfect Match

To itemize or not to itemize? That is the question with personal tax returns due April 17. When choosing between a standard or itemized deduction, you’ll want to pick the method that gives you the lower taxes.
 
To do this, first figure out the amount of your standard deduction. It’s based on your filing status and can change each year from inflation adjustments. For 2011, the amounts are:

Single: $5,800
Married Filing Jointly:   $11,600
Head of Household:   $8,500
Married Filing Separately:  $5,800
Qualifying Widow(er):  $11,600
 
These numbers are higher for taxpayers who are blind and/or 65 or older. If the total amount you spent on qualifying expenses is more than your standard deduction, you can usually benefit by itemizing.  
 
However, not everybody gets to choose between itemized and standard deduction. Are you a nonresident alien, dual-status alien, or an individual who files returns for periods of less than 12 months due to a change in accounting periods? If you answered yes to any of the above, you are not eligible for the standard deduction.
 

Those in the “Married Filing Separately” category have some extra rules when it comes to deductions. If one spouse itemizes deductions, the other spouse must also itemize to claim their allowable deductions. Better dust off those communication skills and make sure you and your spouse are on the same page, that is “standard or itemized?”  Hit that “refresh” button and make sure both of your tax returns are in sync….

Now that you’ve decided on standard or itemize, the next item on your list should be to finish your taxes…
 
On the Money,
Sufen Wang
Wang Solutions