tax deductions - Herman & Co. CPA

Midyear Tax Planning Ideas

Tax planning is a year-round process, so now is a good time to think about the following:Are you considering making a cash gift to a relative? If so, consider making the gift in conjunction with the overall revamping of your stocks and mutual funds held in taxable brokerage accounts to achieve better tax results

Tax Collection and Payment Alternatives

The IRS may take action to collect money if you do not pay the taxes you owe in full, if you do not pay the taxes you owe on time or if you do not make arrangements with the IRS to develop a tax payment plan.

Implications Of Filing An Extension For Your Tax Return

Tick… tick… tick…

That’s the sound of the tax-filing clock winding down to April 15. What if you don’t think you’ll make the deadline? The consequences may not be as serious as you fear — if you take some simple steps before the deadline.

Deductible Taxes

Did you know that you may be able to deduct certain taxes on your federal income tax return? The IRS says you can if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation. There are four types of deductible non-business taxes.

Spring Cleaning Tax Tips

With spring right around the corner, many people have been doing some spring cleaning around the house. Instead of bringing old clothes, sporting equipment, and household items to the dump, you should consider donating them to a local charity or thrift store. Someone will find a use for your unwanted items and you could potentially lower your taxable income if you qualify for itemized deductions. You can qualify for itemized deductions if you exceed the allowable standard deduction, which in 2011 is $5,800 for singles and $11,600 for married couples filing jointly.

Passive Activity Loss Limitations

The passive activity loss (PAL) rules were introduced by the Tax Reform Act of 1986 and were designed to curb perceived tax shelter abuses. However, the PAL rules are far-reaching and affect activities other than tax shelters. Additionally, these rules limit the deductibility of losses for federal income tax purposes.

Lifetime vs. Testamentary Contributions

Many taxpayers with charitable intentions struggle with the decision of whether to donate property to charity during their lifetimes or to make a charitable bequest in their wills that will be fulfilled from property included in their estates (testamentary bequests). While taxpayers frequently base their choice between lifetime charitable gifts and testamentary bequests on nontax considerations, they need to be aware of the tax implications of their decision.

Qualified Charitable Deductions

A QCD is a payment of an otherwise taxable distribution made by your IRA trustee directly to a qualified public charity. The funds must be transferred directly from your IRA trustee to the charity.

Itemized Medical Deductions

Medical expenses paid for a taxpayer’s dependent, such as a parent or grandparent, can be added to the taxpayer’s own expenses for itemized medical expense deduction purposes.

Substantiating Charitable Contributions

One of the most popular tax deductions for individuals is the one allowed for donations to charitable organizations – from the local church or synagogue to the Red Cross and various other national organizations. Unfortunately, this deduction has also been among the most abused.