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Sunday, Dec. 28, 2014

Make your own stimulus check

Saturday, January 10, 2009

Many of us have done it -- dropped a garbage bag stuffed to capacity with clothes to be donated to a charity, and claimed a small sum at tax time for the contribution.

In reality, those bags are probably worth a lot more in deductions than most people realize.

When making a non-cash deduction, get a written receipt. Beginning with 2007 returns, receipts or some sort of written confirmation were required by law for all charitable donations. Without one, you will be unable to get the deduction in the event that you are audited.

According to the Web site funwithtaxes.com, if your donated clothing is in good or better condition, you can figure its value piece by piece. The site suggests going to a thrift store and using the prices on items similar to yours to figure their value.

Doing so could get you hundreds of dollars in deductions.

"Just make sure you have a list of what you gave and its value," said David Bray, owner of Bray & Associates CPAs LLC of Greencastle.

Clothing donations are only one area where taxpayers often sell themselves short.

"The auto excise tax deduction is one a lot of people miss," said Bray.

Although sales tax is normally not deductible, you can take an itemized deduction on Schedule A (an itemized deduction form separate from the form 1040) of your federal tax return for the excise tax you pay when you buy your license plates. You can take this deduction every year you renew your plates.

Those who pay health insurance premiums with money that is not taken from their pay before taxes can claim a deduction for it.

"If you're self-employed, you can deduct 100 percent of he premiums on the front of your 1040," said Jean Lents, owner of Lents Accounting in Bainbridge. "Those premiums are included in your adjusted gross income and don't have to be itemized, so you don't have to use a Schedule A."

Those who are not self-employed but pay for their health insurance or long term care premiums with money that has already been taxed can potentially deduct them, but any premiums paid have to be itemized and be added to other medical expenses. Medical expenses have to exceed 7.5 percent of your adjusted gross income before you will receive any tax benefits for them.

For those who find themselves feeling generous toward the end of the year but short on cash, there is good news -- you can charge a donation to your credit card and claim it for the year you made the donation. You don't have to wait to claim it in the year you pay the credit card bill.

"You can claim the deduction for the year the donation was made if you use a major credit card like Visa or Mastercard," Bray said. "For other store cards, the donation isn't deductible until the bill is paid."

The important thing to remember is to get a receipt from the charity to which the donation was made. For added documentation, you can also have your credit card company send you a record of the transaction from their end.

Volunteers are also eligible for tax credits.

"You can deduct mileage if you volunteer for a non-profit organization," Bray said.

You can also get creative when looking for medical expense donations.

"If you live in Greencastle and make a long distance phone call to a doctor in Indianapolis, that's a medical expense," Bray said.

Another group who can claim some not-so-well known tax deductions are educators. Teachers can claim as much as $250 for materials purchased throughout the year on the front of their form 1040s.

Going green could also get you more green at tax time.

If you bought a new hybrid gas-electric automobile or truck in 2008, you could get a conservation tax credit of anywhere from $250 to $1,000, as well as a fuel economy credit of between $400 and $2,400 (dependent upon the make of your new vehicle and the fuel economy).

Also, keep track of tax planning and investment expenses, which are part of miscellaneous itemized expenses (these must exceed 2 percent of your adjusted gross income to give you any tax benefits).

For tax planning, you can deduct tax preparation fees and legal and accounting fees related to tax planning. For example, any time spent going over the tax aspects of alimony or child support during a divorce would qualify.

As far as investments go, remember things like safety deposit box fees, fees paid to brokers and IRA fees, as well as the costs of subscriptions to investment publications and newspapers. You can also deduct for long distance phone calls and mileage for trips to see brokers.


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So...we have to have a reason to help others? Money stimulates our willingness to give away what we no longer need to others who truly DO. Super. Good job modern day ethics. Good job.

-- Posted by sheesh on Sun, Jan 11, 2009, at 9:41 AM


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