Tuesday, July 16, 2013

Tips for Taxpayers Who Travel for Charity Work

Do you plan to travel while doing charity work this summer? Some travel expenses may help lower your taxes if you itemize deductions when you file next year.

Here are five tax tips the IRS wants you to know about travel while serving a charity.
  1. You must volunteer to work for a qualified organization. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Select Check tool to see if the group is qualified.
  2. You may be able to deduct unreimbursed travel expenses you pay while serving as a volunteer. You can’t deduct the value of your time or services.
  3. The deduction qualifies only if there is no significant element of personal pleasure, recreation or vacation in the travel. However, the deduction will qualify even if you enjoy the trip.
  4. You can deduct your travel expenses if your work is real and substantial throughout the trip. You can’t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.
  5. Deductible travel expenses may include:
    • Air, rail and bus transportation
    • Car expenses
    • Lodging costs
    • The cost of meals
    • Taxi fares or other transportation costs between the airport or station and your hotel
More information is available by reading IRS Publication 526, Charitable Contributions
 
Please contact a member of the Acuity Advisors' Individual Services Team at 717.239.5180 if you have questions or need more information.


As required by the United States Treasury Regulations, you should be aware that this communication (including any attachments unless expressly stated otherwise) is not intended by the sender to be used, and it cannot be used, for the purpose of avoiding penalties under the United States federal tax laws.

Wednesday, June 5, 2013

Simplified Home Office Deduction!


Sometimes, the deduction is not worth the hassle.  At least, that is how some taxpayers view the home office deduction.  Nevertheless, the home office deduction is valuable provided you qualify and follow the rules.  Not only does the deduction reduce your income tax, it also reduces your self employment taxes.
 
Prior to 2013, you had to know your actual home related expenses and maintain the documentation for those expenses.  Although you received a depreciation deduction for the portion of your home used exclusively as the home office, the deduction complicated tax return reporting upon the eventual sale of your home.  
 
But, beginning with your 2013 tax return, the IRS is offering a simplified option for the home office deduction.  Under this option, you are allowed a standard deduction of $5 per square foot of home used for the business, up to a maximum of 300 square feet.  Your home mortgage interest and real estate taxes are fully deductible as itemized deductions.  Depreciation expense is not deducted. The subsequent complications upon sale of your home are eliminated if you have never used the regular method.  
 

Tuesday, May 28, 2013

School's Out!

Summer is here, the kids are out of school and, if you are a working parent, you may be paying for care for your children while you are at work.  If so, you may qualify for a tax credit that can reduce your federal income taxes. 

Here are the ground rules for claiming the credit:

First, you must have earned income either from wages or self employment income.  If you are married, your spouse must also have earned income unless your spouse is a full time student or not capable of self care.

Your child must be under age 13 and be claimed as a dependent on your tax return.  

Wednesday, May 15, 2013

NFL Draft Results - Who is #1 After Taxes?


As realtors remind us, it’s all about location, location, location.  
 
The Number One draft pick, Eric Fisher, received a signing bonus of $14,500,000 (rounded) while the Number Two’s bonus was “only” $13,800,000 (again, rounded), a substantial difference of $700,000.  But, Luke Joeckel, the #2 pick, will be playing for the Jacksonville Jaguars while the #1 pick will be playing in Missouri for the Kansas City Chiefs.  
 
Missouri state income taxes are even higher than Pennsylvania’s, a hefty 6%.  Plus, Kansas City has a local tax of 1%.  Florida has no state income tax.  Assuming Fisher lives in Kansas City, Missouri, his state and local income taxes on the signing bonus and his first year compensation will total roughly $1,042,000.  Joeckel, living in Florida, will pay no state and local income tax. 
 
The net effect is that our #2 pick’s take home pay will be nearly $300,000 higher than the #1.  Of course, at these salary levels, a difference of $300,000 may not be noticed after all. 
 
Please contact a member of the Acuity Advisors' Individual Services Team at 717.239.5180 if you have questions or need more information.

As required by the United States Treasury Regulations, you should be aware that this communication (including any attachments unless expressly stated otherwise) is not intended by the sender to be used, and it cannot be used, for the purpose of avoiding penalties under the United States federal tax laws.

Monday, April 22, 2013

The Obama's 2012 Tax Return

The Obama’s 2012 tax returns were signed on April 8, 2013 and have been posted on the White House website. The First Couple reported adjusted gross income of just over $600,000, a decrease of $200,000 from their 2011 tax return. Their federal taxes totaled $112,214 including $21,000 of alternative minimum tax and nearly $7,000 of self employment tax. Their overpayment of $16,815 was applied to their 2013 tax year.

Tuesday, March 5, 2013

How much do you REALLY pay in taxes?

Taxes are more than income taxes. On one level, we all know that. In addition to income taxes, we pay real estate taxes, social security taxes, sales taxes, fuel taxes, and the list goes on. Some of these are very visible (income taxes, especially at this time of the year) and some are more hidden.

A year ago, I gave you a link to the Total Insights website which computes your total personal tax burden.  Total Insights is provided as a service of the American Institute of Certified Public Accountants (AICPA).  In addition to computing the total tax burden, the website can also compute your tax burden at more than one location. If you are considering moving, this website can help you compare the tax costs at various sites, a valuable piece of information to have.

Please contact a member of the Acuity Advisors' Individual Services Team at 717.239.5180 if you have questions or need more information.


As required by the United States Treasury Regulations, you should be aware that this communication (including any attachments unless expressly stated otherwise) is not intended by the sender to be used, and it cannot be used, for the purpose of avoiding penalties under the United States federal tax laws.

Thursday, February 14, 2013

Tax-Nerd Alert!

I know. Most tax topics are interesting only to tax-nerds. But this nerdy topic is important because it deals with terms we all hear every day in connection with taxes, which are:

Marginal Tax Rate vs.  Effective Tax Rate