Category Archives: Taxes - Page 2

Some Tax Tips for Taking Advantage of Tax Laws

At the end of every year, do you wonder if you will end up paying too much in tax? The best way to go about tax filing is you want to always try to come out even. This way you’re not letting the government borrow your money interest free and also you can use your money when you want to. Here’s some quick tips to look over.

  • If you own two cars, alternate your use of each car from month to month.
  • If you have children under the age of 18, you can hire them at fully deductible wages and owe no social security or federal employment taxes if your company is a sole proprietorship or partnership in which both partners are parents of the children. However, don’t cheat, make sure that they perform actual work for your business.
  • You may remember that dry cleaning and laundry expenses during a business trips are deductible. Did you know that you can also deduct your first dry-cleaning bill after returning home. However, this only applies for the clothes dirtied while you were traveling.

Life’s full of many hacks, always try to find ways to get around things. Hope these tips help.

Tips on Ways to Maximize Tax Deductions for Travel

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Remember that you cannot deduct expenses that are for personal purposes, but you can deduct travel expenses that are the ordinary and necessary expenses of traveling away from home for your business or job.You may also deduct travel expenses, including meals and lodging, you had in looking for a new job in your present trade or business. You may not deduct these expenses if you had them while looking for work in a new trade or business or while looking for work for the first time. If you are unemployed and there is a substantial break between the time of your past work and your looking for new work, you may not deduct these expenses, even if the new work is in the same trade or business as your previous work.

With that being said, here are some tips to maximize tax deductions for travel:

  • Do not prorate travel costs of getting to and from your business destination.
  • Allocate travel expenses between business and non-business. Prorate your business and non-business expenses to identify the business expenses that are tax-deductible.
  • Deduct costs associated with travel outside the United States. If you did not want to spend your entire time on business, you can still deduct the entire cost of your travel outside the United States.
  • Deduct travel expenses for another individual. Yes, you can deduct the travel expenses for another individual who travels with you as long as its a business trip and he/she is an employee of your business.
  • Deduct the cost of travel associated with your attending a business convention. You can deduct your travel expenses when you attend a convention as long as you can show that your attendance benefits your business.
  • Deduct up to $2,000 each year for attending cruise ship conventions that are directly related to your business. As long as you meet the following conditions: The ship must be registered in the US, All ports must be in the US, You must submit two supporting statements with your tax return, and you must spend at least 51 percent of your time attending the seminar.
  • Qualify a day as a business day. You can do this if your primary activity was business. A good rule of thumb is that your business activity be at least four hours in length during normal working hours.

[Photo Credit]

Tax Deduction in 5 minutes

taxprep.jpgLets make this short and sweet.

Most Individual taxpayers have a choice when it comes time to prepare for your Federal tax returns. Generally, you have two choices when it comes down to tax deductions:

  1. Standard Deduction – A base amount of income in which is not subject to tax or deduction used to reduce income by taxpayers who do not itemize. The standard deduction for 2006 is $5,150.
  2. Itemized Deduction - A deduction based on a list of allowable items that a person can claim.

In other words, the taxpayer may generally deduct the total itemized deduction amount, or the standard deduction amount, whichever is greater. Everyone should explore their options and opportunities for itemized deduction before choosing to go with standard deduction. Here are some things you can deduct if you choose to itemize.

  1. Home ownership – For the most people who itemize, mortgage interest and property taxes are the largest deductions. You may also be able to deduct “points,” a type of fee paid when obtaining a mortgage.
  2. Sales tax – Taxpayers who itemize deductions can still deduct either state and local sales taxes or income taxes on their 2006 returns.
  3. Charitable gifts – Almost anything you donate to a charitable organization is deductible
  4. Work related costs – If you paid expenses for your job that weren’t reimbursed, you can deduct them, as long as they add up to at least 2 percent of your adjusted gross income
  5. Students/Teachers – If you’re a student or a teacher, you may qualify for two new tax deductions authorized by Congress late last year. Higher education expenses or out-of-pocket expenses for teachers.
  6. Property losses – For items not covered by insurance, you can deduct property losses from theft, vandalism, fires, storms, hurricanes, floods, tornados, and earthquakes.
  7. Medical and Dental expenses – You can deduct these expenses, but only if they’re more than 7.5 percent of your adjusted gross income.

I’m back and I’m still in debt

Wow that was a nice spring break. Boy did that week go by super fast. Speaking of which, this whole year is going by super fast. I can’t believe that it’s almost April! Where did this last 4 months go? Well anyways, I know I haven’t been posting for a while but I should be able to get back on track now that midterms are over and I have more time :)

Good news: Today I finally got my taxes done!  And boy was I disappointed(still good news).

So here’s the verdict. Last year I made about 25k with two jobs and paid a little over 5k in taxes.  Five thousand US dollars! I was thinking, “man…I’m gonna have a really nice refund this year, I can finally take my girlfriend out to a nice dinner”. I was wrong. It came down to me OWING the state 104 dollars and getting a refund of 600 dollars from federal. The bright side is I get something back, but I was expecting that something to be more like 2k or something. I mean I paid 5k so 2k sounds reasonable right? Overall, after subtracting the 100 bucks for the state balance, I’ll be getting about 500 or so. Better then nothing eh?

Bad news: I’m still in debt. And doesn’t looks like I’m gonna be debt free within the next month :(

With all the recent bills tackled onto my credit card, looks like I’m back where I was in February. My credit card is back up to a little over five thousand dollars again. Here’s the lineup for what’s been slowing me down:

  • Six months of auto insurance
  • Last 3 months of cell phone bills
  • Membership fees
  • Grocery/gas
  • Car maintenance

So all that has put me back up to a total of $5,404.22. I do have some incoming cash so I think I can knock it back down to about 3-4k. My goal is to get this whole thing paid off before summer starts. I would love to start my summer off being debt free.

I want to remind everyone that the last day to file your taxes are April 17th so if you haven’t done so get them done!

The different forms of taxes

Tax season is here and I guess everyone could get a little touch up on taxes and its different forms. I didn’t know there were so many of them. Let’s see how many of them you know…

  • Capital gains tax – is a tax charged on capital gains, the profit realized on the sale of an asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property.
  • Corporation tax – refers to a tax levied by various jurisdictions on the profits made by companies or associations.
  • Excises – sometimes called an excise duty, are taxes paid when purchases are made on a specific good, such as gasoline
  • Income tax – a tax levied on the financial income of persons, corporations, or other legal entities.
  • Inheritance tax – Inheritance tax, estate tax and death duty are the names given to various taxes which arise on the death of an individual
  • Poll tax – A poll tax, head tax, or capitation is a tax of a uniform, fixed amount per individual (as opposed to a percentage of income).
  • Property tax – Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed.
  • Retirement tax – Some countries with social security systems, which provide income to retired workers, fund those systems with specific dedicated taxes.
  • Sales tax – a state or locality imposed percentage tax at the point of purchase for certain goods and services
  • Tariffs – A tariff is a tax on foreign goods upon importation.
  • Toll – A toll is a tax or fee charged to travel via a road, bridge, tunnel or other route
  • Transfer tax – In a narrow legal sense, a transfer tax is essentially a transaction fee (often relatively small in relation to the value of property) imposed on the transfer of title to property
  • Value added tax – is tax on exchanges. It is levied on the value added that results from each exchange
  • Wealth (net worth) tax – Because of the broad term “wealth”, property tax, capital transfer taxes (inheritance tax, estate tax, gift tax), endowment tax and capital gains taxes are sometimes referred to as “wealth taxes”.

Here’s a neat graph I pulled from wikipedia that gives the average taxes paid from different parts of the world.

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How I plan on using my tax return

vm_tax_story.jpgSo it’s that time of the year where everyone is gathering all their paper works and getting ready to fill out those tax forms. Almost everyone I know has already filed their taxes, and so I guess that leaves me. Well the reason for that is because I have been pretty busy these last two weeks, and also I’m kinda paranoid that I might not file them correctly if I rush and not get back as much as I could, so I waited. My goal for this week though is to get all my paper work together and get it done this weekend. This past year, I paid a little over $4000.00 in taxes so it looks like I should be getting back around $2,500.

So what is my plan for my tax return this year? Buying new clothes? Adding more DVDs to the collection? Going on a nice trip to Hawaii with the Girlfriend for spring break? Nope, it’s better. Instead, every penny that I get back it’s all going to help pay off my debt on my credit card. So after my tax return gets here, I will be extremely close to being debt free. I can’t wait. That gives more of  a reason to file my taxes asap. So I hope that I will be able to do so this week.

After getting out of debt, I can finally start contributing to my Roth IRA and so much more other fun investment funds. :)