David Kirkpatrick

March 9, 2010

Unemployed? Be sure to take advantage of new tax break

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 11:49 am

It’s getting a little late in the game for this year’s taxes, but if you are unemployed you should make certain you take advantage of every tax break out there. You probably know within certain constraints you can deduct job search expenses, but this year offers a new break on unemployment insurance tax.

From the link:

Traditionally, every penny of unemployment insurance is taxed. But with 8.4 million job losses since the start of the recession, that rule is changing this year.

If you received unemployment checks last year, you can exclude the first $2,400 from your return. You have to remember to do this math yourself, since the documents from your state employment agency won’t exempt it. This benefit won’t be around next year.

February 26, 2010

Tax deductions — the odd, the strange and the crazy

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 3:58 pm

Ever wonder if your crazy tax deduction idea would pass the IRS’s muster? Here’s a list of 14 “oddball” deduction that did just that.

And here’s three samples from the  link:

4. Cat food. A couple who owned a junkyard were allowed to write off the cost of cat food they set out to attract wild cats. The feral felines did more than just eat. They also took care of snakes and rats on the property, making the place safer for customers. When the case reached the Tax Court, IRS lawyers conceded that the cost was deductible.

And:

7. Breast augmentation. In an effort to get bigger tips, an exotic dancer with the stage name “Chesty Love” decided to get implants to make her a size 56-FF. The IRS challenged her deduction, saying the operation was cosmetic surgery. But a female Tax Court judge allowed this taxpayer to claim a depreciation deduction for her new, um, assets, equating them to a stage prop. Alas, the operation later proved to be a problem for Ms. Love. She tripped, rupturing one of her implants. That caused a severe infection, and the implants had to be removed.

And finally:

10. Free beer. In a novel promotion, a service-station owner gave his customers free beer in lieu of trading stamps. Proving that alcohol and gasoline do mix — for tax purposes — the Tax Court allowed the write-off as a business expense.

February 16, 2010

New deductions and credits for 2009 tax year

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 1:27 pm

Here’s a handy list of ten new deductions and credits for this year’s taxes from Thomson Reuters.

From the link, numbers four and five — one for the employed and one for the unemployed:

4. Making work pay credit. Income tax withholding was reduced during 2009 to reflect the new making work pay credit, which slashes tax liabilities by up to $400 ($800 on a joint return). “Employers had to shoulder all the work of the withholding adjustment, but employees now need to claim the credit on their tax returns in order to hold on to that extra take-home pay,” Scharin explains. Tricky aspects of this credit arise from the eligibility rules; some folks whose withholding was reduced are not actually eligible for the credit. Ineligibility could arise because the credit phases out in the MAGI range of $75,000 to $95,000 ($150,000 to $190,000 for joint returns).

5. Unemployment compensation. Up to $2,400 of unemployment compensation benefits are completely tax-free in 2009. “These benefits are not included in your adjusted gross income, and that could help you to qualify for other tax benefits that have AGI restrictions,” Scharin points out.

January 8, 2010

If you do your own taxes …

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 7:08 pm

… remember a whole slew of tax provisions — credits, deductions and others — expired at the end of 2009.

From the link:

The ringing in of the new year at midnight on Dec. 31 also signaled the expiration of several tax provisions. The biggest was the estate and generation-skipping tax regime, which is repealed for 2010. Various bills have been introduced that would revive the estate tax in its 2009 form, but as of Jan. 1 no extension has been enacted, and the estate and generation-skipping taxes, at least temporarily,  no longer exist.

August 18, 2009

Home office deduction for dummies

I go to the trouble of taking a home office deduction because it’s worth it to me. As a professional writer I’ve worked out of my home for a long time.

Many people have home offices, but less than half take the tax deduction because the process is not easy. Once you’re going it’s not too bad, but it’s still a little onerous.

This idea makes too much sense. Quick, easy and nothing would change for those of us who actually go to the trouble of taking full advantage of the tax break.

From the link:

To ease the process, Reps. John McHugh, R-N.Y., and Kurt Schrader, D-Ore., introduced the Home Office Deduction Simplification Act last spring. The bill would create a standard $1,500 deduction, which owners could opt for over the messier version. It would translate into a tax savings of about $500 for those who aren’t currently taking the deduction, says Keith Hall, tax adviser for the National Association for the Self-Employed.

March 30, 2009

Wild tax deductions

Filed under: Business — Tags: , , — David Kirkpatrick @ 12:37 pm

Tax season is nigh and insane tax deductions are always a rich vein to mine. Here’s nine “wacky” deductions curtesy of MSN Money.

From the link:

3. At least it wasn’t ‘travel and entertainment’

Sometimes business owners will try to slide a fast one by the IRS by classifying a business deduction in a category where the dollar signs might not raise an eyebrow.

 

One such fastball didn’t pass the eyebrow test with this Oklahoma accountant, however.

“We were reviewing a business client’s accounting entries and noted a check for over $2,000 written to a gynecologist. It was classified on the business books as ‘repairs and maintenance.'”

March 13, 2009

Saving money with health insurance

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 3:50 pm

Times are tough and pretty much everyone is looking to save money. One place to find savings can be health insurance.

It’s tempting to drop health insurance, particularly if you’re unemployed and no longer have insurance through your employer, but the long-term consequences are not worth going without basic medical care. And the immediate consequences of a medical emergency if you are uninsured are just frightening.

Here’s some tips on saving health insurance money for people who are in employer-based plans and for people who must find health insuarnce on their own.

From WeCompareInsurance.com:

Saving Money with Health Insurance

 

Everyone likes to save money and your health insurance is a place where you can find savings. The easiest way to save money with health insurance is to only insure yourself for large, catastrophic medical problems or to increase your deductible in order to decrease your monthly premium. Both of these choices might not be the best health insurance option for everyone because each will increase your out-of-pocket medical expenses for everyday medical care and preventative examinations.

There are a number of tips to keep in mind beyond increasing your out-of-pocket expenses to minimize your health insurance costs while receiving the health insurance coverage you and your family needs.

Here are six things to consider for saving money through your health insurance:

  1. If you are part of a health insurance plan such as a POS (point-of-service) or PPO (preferred provider organization), make sure you only use doctors and medical services that are in-network for your plan.
  2. Take every tax deduction offered on health insurance. For the self-employed this means deducting all your health insurance premiums, and for participants in employer-based plans deducting the portion you pay of your health insurance premiums. And medical and dental expenses you incur that your insurance doesn’t cover that exceed 7.5 percent of your adjusted gross income (AGI) can be deducted as well.
  3. When you are comparing health insurance quotes take a look at the long-term implications of your plan. Lower health insurance premiums and up-front costs will mean more out-of-pocket expenses and possibly much higher medical costs over the long run. Consider how you expect to use your health insurance and factor all the costs when comparing health insurance quotes.
  4. Don’t make visits to the emergency room unless you are experiencing an actual medical emergency. The co-pay will likely be very much higher than for a regular office visit.
  5. If possible participate in employer- or other organization-based group health insurance. The rates and qualification requirements are typically lower. If you are part of a employer-based group health insurance plan have your employer pay the premium on a pre-tax basis to lower your overall taxable gross pay. Another way to reduce your taxable income is to participate in your employer’s flexible spending plan to save money for out-of-pocket health insurance expenses such as co-pays, some medications and certain medical devices.
  6. Save money on health insurance prescription medication by using online pharmacies. Traditional pharmacies will typically dispense only a 30-day supply of medicine while online pharmacies will allow for 90-day supplies for the same co-pay.