Charitable Contributions Tax Deduction

charitable contributions

Republicans passed the Tax Cuts and Jobs Act in 2017 reshaping the way many Americans pay taxes. Apart from the uninspired, and obvious marketing, based name, the law made some deductions disappear. It tried to fill in those deductions by giving everyone a higher standard deduction. Theoretically, people pay the same or lower taxes and don’t have to itemize to do it, but politics gets in the way of everything in Washington. Charitable Cash Contributions One of the things that was originally supposed to go away in the bid to make it so fewer people had to itemize was getting rid of the charitable contributions deduction when you took the standard deduction. But there were howls of terrible things to come, whispers of charities disappearing from the country all together, cats and dogs living together, mass hysteria! And so, Congress caved and let people who take the standard deduction still take a deduction for some charitable giving. Line 10b under Adjustments to Income, taxpayers may deduct up to $300 for cash donations. That $300 is the same for filing single or married filing jointly. If you do the married filing separately thing, you have to split it, so each of …

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Medical Expenses Deduction 2021

medical-taxes

Can you deduct medical expenses in 2021? Are your medical expenses tax deductible? Yes… but… Medical Expenses Tax Deduction Limit Medical expenses are tax deductible for 2021, but only after they exceed 7.5% of your income. You also must itemize your deductions to claim the medical expenses tax deduction. Finally, medical expenses are deductible in the year you PAY them, not when they happen. If you’re going to hit the medical threshold in 2021, then pay as many as you can by December 31. If you are not going to hit the threshold, push as many medical expenses as you can into 2022. What does this all mean exactly? Let’s dig in. Check out my Grifin review The tax deduction for medical expenses has a floor of 7.5% of income. By income, the IRS means your adjusted gross income (AGI). Usually, when the IRS has rules or regulations that refer to income, they mean your AGI. Your AGI is calculated on your Form 1040. Your adjusted gross income shows up on Line 11. Your total income is basically all of your income from wages, capital gains, interest, dividends, Social Security, business income (if any) and pensions added together. Your adjusted …

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How To Deduct Property Taxes

Property taxes can be an important tax deduction for many home owners. Real estate taxes, in particular, can be a significant tax deduction.

End Of Year Tax Tips – Save Money On Taxes By Donating Clothing and More

As the end of the year races toward us, the opportunities to find and take advantage of tax deductions and loopholes to save money on income taxes are growing scarce. Fortunately, there are still plenty of tax saving strategies that you can implement even with just a few weeks to go until the end of the tax year. One of the most effective ways for typical households to lower their tax bill is by donating items to charities. Unlike cash donations, donating used goods to charity is a free way to reduce the income taxes you pay. A quick trip to the basement or storage closet could turn up several trash bags worth of used clothing that no longer fits your children, or you. Other items like shirts, pants, suits, jackets, shoes and more may just be out of style, or no longer fit your current dressing manner. For example, workers who used to have to wear a suit and tie to the office may now work in a business casual environment. Unless you live on the East Coast, suit and tie occasions don’t come up all that often. Hold onto one dark suite for funerals and formal weddings, and …

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More Tax Deductions for Small Business Owners and Sole-Proprietorships

A great tax saving strategy, particularly for higher-income taxpayers is to start a small business. Many expenses that are not deductible for regular Federal Income Taxes are deductible to a business. For example, the mileage deduction is not deductible for personal driving purposes, and mileage driving to work is also not deductible. However, mileage driven for business purposes is tax deductible. While starting a phony small business is not a good idea, no matter how big of tax savings can be achieved, there are many legitimate businesses that people can start. The key aspect of being legally considered a business for tax purposes is that there must be a profit motive to the activity. That profit motive must outweigh other reasons for engaging in the activity, otherwise, the enterprise could be considered a hobby instead of a business. Formally incorporate the business with the Secretary of State in your state. Set up a LLC, it makes a great business structure for single-owner small businesses and is typically cheap and easy to setup. Filling out an online form and paying a registration fee is usually all that is required. Then, get an Employee Identification Number, or EIN from the IRS. Unofficially …

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Quick Money Saving Tip

home-house Christmas is over, but the bills might not all be gone.  Plus, Uncle Sam is going to want his kickback, that’s taxes to you and me, by April.  Throw in a recession, and it is probably a good idea to look at saving some money.

If you’ve been through your budget and you don’t find anything out of whack (tip: if your cell phone bill is more than $60 and you aren’t a traveling salesman, it’s time to re-evaluate) then we need to pull out some less used tips.

Homeowner’s Insurance Deductible

The dirty secret about homeowner’s insurance is that filing claims will get you and your policy dropped by the insurance company.  Those same claims will keep you from getting a new insurance policy with another company.  Sometimes, as little as 3 claims in 2 years will get you dropped like a hot potato.

Since there is nothing you can do about how insurance companies behave, the next best thing is to work smarter within their system.  Only file large claims and use your savings to pay for the nickel and dime stuff like a few shingles blown off the roof.  Of course, if you aren’t going to be filing smaller claims, then you shouldn’t be paying for the coverage.

Raise your homeowner’s insurance deductible to at least $1,000.  Chances are a $1,500 or $2,500 deductible won’t lower your rates that much more, but check anyway.  Saving $10 a year to raise your deductible $1,000 doesn’t make much sense, but if you can save $50 or $100 then that’s something to think about.

If you are the very responsible type and you have the recommended 3 to 6 months of living expenses tucked safely away in an emergency fund that you never touch, you can even consider a $5,000 deductible which could significantly lower your home insurance.  But, do the math first.  It will likely only make sense if you have a high value home.

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Also, do a homeowner’s review with your company if you have made any improvements or security upgrades.  The new alarm system might be worth a discount.  The same goes for removing anything that raised your rates.  If you don’t have a dog anymore, make sure they know that too.

Be careful that your insurance agent doesn’t use your review to sell you other insurance, or even more home insurance.  You are there for home insurance only, and you don’t want to talk about life insurance, car insurance, or any other insurance, no matter how good of time it is, or how great the deal is.  You especially don’t care if rates are going up next month (a common insurance salesman line). 

Also, there is no need to insure your home for full replacement value.  Laws very from state to state, but generally, a homeowner’s insurance policy provides for 120% or so, of coverage should your whole house need replaced.  But, that kind of event is relatively rare.  Even if you have a fire, chances are you’ll be repairing the house, not rebuilding it from scratch.

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