Save for the grey years and avail IRA tax deduction
Save for the grey years and avail IRA tax deduction IRA, or Individual Retirement Arrangement, is a personal savings plan that lets you save up for rainy days and gives you tax benefits in the form of tax deductions. All contributions made to this plan are entitled to the IRA tax deduction. This also includes earnings from these contributions unless they are distributed to you. There are two types of IRA and therefore two set of rules where deductions are concerned. The first is the simple IRA. A traditional IRA is a personal savings plan that encourages you to save [...]
Standard tax deduction can cut your taxes substantially
Standard tax deduction can cut your taxes substantially The standard tax deduction is a safety valve. It reduces the taxable amount by a flat sum. However, you need to see what benefits you more – standard tax deduction or itemised deduction. The latter is available on a range of items like medical expenses, charitable payments, mortgage interest, etc. Under the federal law you can avail only one of the two. The deduction slabs are usually revised every year so that the tax benefit keeps pace with inflation. The actual deduction, however, varies with the filing status of the individual. Thus, [...]
Mortgage tax deduction is a great way to trim taxes
Mortgage tax deduction is a great way to trim taxes A key benefit of buying a home is to get tax deductions on the mortgage interest and the real estate tax. The mortgage tax deduction can be availed as long as the loan amount for the primary residence and second home is less than $1.1 million. This makes this deduction one of the best ways to trim taxes. An important date in the US home loan calendar is October 14, 1987. All home loans taken before this date are exempt from new rules. A taxpayer can deduct the full interest [...]
Don’t miss out on home business tax deduction
Don’t miss out on home business tax deduction Those who are self-employed or are planning to start a business from their home should make full use of the provisions made under the different home business tax deduction heads. These deductions include: 1. Home Office: A home office is that part of the house, which you use solely for your business functions. You can benefit from the home office deduction if you use this office regularly and exclusively for business. Indirect expenses and depreciation too can be deducted. 2. Car: If you use a car to carry out your business then [...]
Vehicle tax deduction can cover a part of showroom price
Vehicle tax deduction can cover a part of showroom price If you have bought a clean fuel vehicle, that is one with a gasoline engine and an electric motor, or one that runs on electricity you can avail a vehicle tax deduction. The former can get you a one-time tax deduction up to $ 2,000 while the latter can fetch you a one-time tax credit up to $ 4,000. To qualify your vehicle as a clean fuel one, you must make sure that it runs on either of the following fuels: natural gas, LNG, LPG, Hydrogen or any other fuel [...]
Daycare tax deduction can lighten your burden
Daycare tax deduction can lighten your burden If you have set up a day care business in your home, you are eligible for daycare tax deduction. This deduction is valid even if you do not use the premises exclusively for business. What is a care centre by day can well be home by night; and you will still be eligible. However, it is important to know what qualifies as daycare. When you provide care for children or individuals incapable of looking after themselves because of physical or mental impairments you are in the daycare business. But to run one, you [...]
Child care tax deduction can prove to be a bundle of joy
Child care tax deduction can prove to be a bundle of joy Child care tax deduction is a policy that gives you yet another reason to keep your family tree growing. There are many tax savings that you may be entitled to because of your new bundle of joy. Some of the benefits are: (a) Supplementary exemption called Dependency Exemption (b) Child Tax Credit (c) Child and Dependent Care Credit (d) Tax deduction, by transferring revenue to the child. (a) Dependency Exemption: This is a form of personal exemption and it reduces your tax bill by subtracting the necessary amount from [...]
Self-employment tax deduction is a blessing
Self-employment tax deduction is a blessing Self-employment tax deduction is a blessing for those who run their own business or are planning to set up their business. They can avail several tax benefits on their expenses — benefits that were note available to them when they were working as employees. The self-employed professionals can use their Social Security number as their business tax identification number and file taxes under Schedule C or Schedule C-EZ. It is important to understand the two schedules, because each provides a different benefit. Form Schedule C-EZ should be used by those whose business expenses are [...]
Claim charitable tax deduction on your generosity
Claim charitable tax deduction on your generosity If you have been donating to charity you should let the tax agencies know, and avail the charitable tax deduction that becomes legitimately due to you. Your contributions to charitable organizations can add up to a sizeable deduction if you itemize them on IRS Form 1040, Schedule A. But before you make the donations you must carry out a few checks. You must remember that only donations made to organizations that are recognized by tax agencies are eligible for tax deduction. You can refer to Publication 78 brought out by the IRS that [...]
How you can use child tax deduction law to save money
How you can use child tax deduction law to save money The child tax deduction laws can be used to reduce your tax bill by “employing” your kids in your business. Kids here refer to minors between 7 to 17 years of age. Hiring your children not only makes them smarter, but also saves you a lot of tax money! As a rule, every child has a standard deduction of $4,570; thus it follows that children are exempted from paying the first $4,570 in income. Now, a child hired in your business is paid the amount, which is deducted from [...]