Value of Donations for Tax Deduction

Donations When you donate your gently used clothing and household items to charity you can take a charitable tax deduction when you itemize your deductions on Form Schedule A. To help you determine the value of your donated items. use the links from the Salvation Army, Goodwill Industries or DonateGuide.com to determine the value of each item to calculate your tax deduction. Don’t forget to get a receipt from the charity for your donated items and keep it with your tax records.

Salvation Army Donation Guide

Goodwill Industries Donation Guide

DonateGuide.com

Paying it forward with your donations helps those in need which is even more rewarding than a tax deduction!

Choose Carefully with EFTPS

Tax TipsUsing Electronic Federal Tax Payment System (EFTPS) to Pay a Split Spousal Assessment

As a reminder, taxpayers can use EFTPS to pay their taxes. When using EFTPS to pay a split spousal assessment, ensure the selection of the correct form to accurately apply the payment. If a user selects the wrong form (such as “Form 1040, U.S. Individual Income Tax Return” instead of “Form 1040, Separate Assessment/Innocent Spouse“) the payment will post to the joint account rather than the separate assessment account as the taxpayer intends. To have a payment correctly applied to MFT 31:

  • Select the payment tab.
  • Open the dropdown menu on “Select Tax Form.”
  • Select “1040 Separate Assessment/Innocent Spouse.”

 

New Notices Related to Form 1099-K

Beware Form 1099The IRS is sending out notices related to Form 1099-K which reports third party network and merchant services revenue paid to your business. If you take credit cards (or payment firms such as PayPal) as a form of payment for your customers, your service provider will send you Form 1099-K to report the revenue paid to your business. The IRS will receive a copy of the forms and will cross check this against the income reported on your business tax return. If it doesn’t agree you will receive a notice.

1099-k-form-2012

Additional details are available with the link: New Notices Related to Form 1099-K.

If you read my blog religiously, as I know you do, you already know about the 3 simple rules to keep the IRS off your back, with one of the rules being, “Respect the 1099 Forms”. Respecting the 1099 forms means you are reconciling your books to the forms before you are preparing your tax return. That means you won’t get one of those lovely notices from the IRS. If however, you did not follow this rule, you may be receiving a notice.

Upon receipt, call me!

 Don’t Worry – Protect Yourself! – Holt Pros

Tax Benefits for Parents

Black Family

Your children may help you qualify for valuable tax benefits, such as certain credits and deductions. If you are a parent, here are eight benefits you shouldn’t miss when filing taxes this year.

1. Dependents. In most cases, you can claim a child as a dependent even if your child was born anytime in 2012.   For more information, see IRS Publication 501, Exemptions, Standard Deduction and Filing Information.

2. Child Tax Credit. You may be able to claim the Child Tax Credit for each of your children that were under age 17 at the end of 2012. If you do not benefit from the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more information, see the instructions for Schedule 8812, Child Tax Credit, and Publication 972, Child Tax Credit.

3. Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for your child or children under age 13, so that you could work or look for work. See IRS Publication 503, Child and Dependent Care Expenses.

4. Earned Income Tax Credit. If you worked but earned less than $50,270 last year, you may qualify for EITC. If you have qualifying children, you may get up to $5,891 dollars extra back when you file a return and claim it. Use the EITC Assistant to find out if you qualify. See Publication 596, Earned Income Tax Credit.

5. Adoption Credit. You may be able to take a tax credit for certain expenses you incurred to adopt a child. For details about this credit, see the instructions for IRS Form 8839, Qualified Adoption Expenses.

6. Higher education credits. If you paid higher education costs for yourself or another student who is an immediate family member, you may qualify for either the American Opportunity Credit or the Lifetime Learning Credit. Both credits may reduce the amount of tax you owe. If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund of up to $1,000. See IRS Publication 970, Tax Benefits for Education.

College Students

7. Student loan interest. You may be able to deduct interest you paid on a qualified student loan, even if you do not itemize your deductions. For more information, see IRS Publication 970, Tax Benefits for Education.

8. Self-employed health insurance deduction – If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child. It applies to children under age 27 at the end of the year, even if not your dependent. See IRS.gov/aca for information on the Affordable Care Act.

Turn those bundles of joy into tax deductions!

Do You Have Nontaxable Income?

taxes made from money

Most types of income are taxable, but some are not. Income can include money, property or services you receive. Here are some examples of income that are usually not taxable:

  • Child support payments;
  • Gifts, bequests and inheritances;
  • Welfare benefits;
  • Damage awards for physical injury or sickness;
  • Cash rebates from a dealer or manufacturer for an item you buy; and
  • Reimbursements for qualified adoption expenses.

Some income is not taxable except under certain conditions. Examples include:

  • Life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
  • Income you get from a qualified scholarship is normally not taxable. Amounts you use for certain costs, such as tuition and required course books, are not taxable. However, amounts used for room and board are taxable.

All income, such as wages and tips, is taxable unless the law specifically excludes it. This includes non-cash income from bartering – the exchange of property or services. Both parties must include the fair market value of goods or services received as income on their tax return. For more information, see IRS Publication 525, Taxable and Nontaxable Income.

What to do about your W-2!

Missing W2     If you have not received your W-2, follow these three steps:

1. Contact your employer first.  Ask your employer – or former employer – to send your W-2 if it has not already been sent. Make sure your employer has your correct address.

2. Contact the IRS. After February 14, you may call the IRS at 800-829-1040 if you have not yet received your W-2.

Be prepared to provide your name, address, Social Security number and phone number. Girl on Phone

You should also have the following information when you call:

• Your employer’s name, address and phone number;

• Your employment dates; and

• An estimate of your wages and federal income tax withheld in 2012, based upon your final pay stub or leave-and-earnings statement, if available.

3. File your return on time. You should still file your tax return on or before April 15, 2013, even if you have not yet received your W-2. File Form 4852, Substitute for Form W-2, Wage and Tax Statement, in place of the W-2. Use the form to estimate your income and withholding taxes as accurately as possible. The IRS may delay processing your return while it verifies your information.

Tax Tips     If you need more time to file you can get a six-month extension of time. File Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return.  If you are requesting an extension, you must file this form on or before April 15, 2013.   Any tax due must be paid by April 15th to avoid underpayment penalties. An extension to file does not extend the payment deadline for any tax due.

If you receive the missing W-2 after filing your tax return and the information on the W-2 is different from what you reported using Form 4852, then you must correct your tax return. File Form 1040X, Amended U.S. Individual Income Tax Return to amend your tax return.

Forms and instructions are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

IRS Accepting Tax Returns with Education Credits & Depreciation

newsThe IRS is now ready to accept tax returns with two major tax forms – education credits and depreciation. Sunday, February 10th was the the first day for them to begin processing tax returns containing Form 4562, Depreciation and Amortization. Thursday, February 14th, they will begin processing returns with Form 8863, Education Credits. These forms affected the largest group of taxpayers who weren’t able to file when the January 30th opening date of the 2013 tax season.

Visit the IRS website for a full list of forms that will be available in March. Happy tax filing!

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