Posts Tagged ‘obscure tax deductions’
Tax Deduction Ideas - Are You Missing This Deduction?
Posted by admin in Tax Credit Vs Tax Deduction on March 8th, 2009
With April 15th looming in the near future, many taxpayers are hustling to give Uncle Sam a good reason not to take more of their hard earned pay. And while there are an assortment of arguments and deductions available to the creative taxpayer, an often overlooked one is the deduction for unreimbursed Casualties, Disasters, and Thefts.
Insurance doesn’t cover everything all the time.
Psst…come over here…a little closer…I want to tell you a secret. Despite your insurance agent’s best efforts, not every claim you file is covered. “No %#@*” you say?!? “I pay all that money in insurance premiums and when (fill in the blank) happens, all I hear is “that’s not covered” “Well, thanks for nothing!”
We’re from the government and we’re here to help.
How many stories end with the IRS riding to the rescue? Well, none actually. However, the IRS can help ease the pain in the case of certain unreimbursed casualty losses. What is a casualty loss? A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Can you give me some examples? Damage to property due to floods, fires, earthquakes, car accidents, and tornados just to name a few.
So what types of losses aren’t deductible? Destruction done by a family pet, dropping and breaking fragile items, and anything you intentionally burn up or pay someone to destroy (NO KIDDING!!!) are all not deductible. What if my stuff was stolen? You’re still in luck (sort of)! The IRS defines theft as the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Sounds great! Where do I sign up? Well, before you go getting all misty eyed over your new found affection for the IRS, let’s take a deep breath.
Like everything involving taxes, there are a few hoops you have to jump through. First of all, you have to itemize your deductions. If you fill out the 1040EZ, you’re out of luck. The only way to claim these deductions is to file Form 4684 and attach it to schedule A on a regular 1040 form. Another thing to consider is that any payment you receive from your insurance carrier is not deductible. In fact, IRS publication 547 states that if you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss.
What if I decide to not file a claim with my insurance company and instead take a deduction on my taxes? Good idea but the IRS won’t allow it. If your property is covered by insurance, you must file an insurance claim for reimbursement of your loss. Otherwise, you cannot deduct a loss as a casualty or theft. The only silver lining here is that if your insurance company reimbursed you minus a deductible, your insurance deductible is deductible from your taxes. Confused yet? Help me make sense of this? PLEASE! Unfortunately, things get more complicated. For the the sake of brevity, I will forgo explanations pertaining to the $100 Rule and the 10% Rule. Just suffice it to say that these are two more calculations that are required before you arrive at the amount of your deduction. Instead, let me show you an example which will hopefully bring this togehter for you:
In June you had a car accident and your car was totaled. You did not carry collision coverage on your car. You paid $18,500 for the car. At the time of the accident the car was worth $17,000. The market value of the car after the accident was $200. Your adjusted gross income for the year the casualty happened is $70,000. You figure your casualty loss deduction as follows:
1. Adjusted basis of car (cost in this example) $18,500
2. Value of car at time of accident $17,000
3. Value of car after the accident $200
4. Decrease in value (line 2 minus line 3) $16,800
5. Loss (smaller of line 1 or 4) $16,800
6. Subtract insurance $0
7. Loss after reimbursement $16,800
8. Subtract $100 $16,700
9. Subtract 10% of $70,000 AGI $7,000
10. TOTAL CASUALTY LOSS DEDUCTION $9,700
Although a $9,700 tax deduction may not be as desirable as a $17,000 check from your insurance company, in this case, it’s better than nothing. So the next time you suffer a property loss that’s not fully covered by insurance, you may still be elgible for some financial relief. And that could cause you to say something you’ve never said before “Thank you IRS!”
Tax Tips And Tax Deductions for Seniors
Tax Return time is upon us and reminders on this are coming up almost every day. Although the specifics depend on which country you live in, there is often merit in looking over lists to see whether it sparks ideas on tax deductions.
11 goofy, but legal, tax deductions
You and I might not have the exact same set of tax circumstances to convince a judge, but at least we can enjoy the resourcefulness and chutzpah of these taxpayers and their oddball deductions.
More Year-End Business Tax Deduction Ideas
This week, I am continuing my series on year-end tax deduction ideas, to reduce your business taxes. In general, consider timing your deductions based on [...]
By: Eric Patrick
Article Directory: http://www.articledashboard.com
Eric D. Patrick is an attorney and Chief Operating Officer of Consumers Insurance Agency Inc. in Camp Hill, PA. Please contact us at www.consumers-insurance.com and www.thatsnotcovered.com . We have provided our clients with meaningful advice and thoughful service for over 25 years.
Affiliate Disclosure: It is advisable to assume that any mention of a product or service on this website is made because there exist, unless otherwise stated, a material connection between the product or service owners and this website and should you make a purchase of a product or service described here the owner of this website may be compensated. To learn more, please click here.
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Wondering What Can I Deduct On My Taxes? - Learn Some Obscure Tax Deductions
Posted by admin in Tax Deductions For Self Employed on March 6th, 2009
It was Albert Einstein who said physics was easy compared to trying to prepare his taxes. You probably feel the same way. The tax code is full of oddities, and here are a few that will make you roll your eyes.
The internal revenue code is thousands of pages long. Throw in the regulations interpreting the code, and you have a wall full of confusing books. To make things even scarier, you are assumed to both know the code and understand it. That should send chills down your back.
Over the years, the code has been modified so many times that nobody really knows it all. Various sections seem to completely contradict others. Some seem to say the exact opposite of others. While this is all frustrating, it is the bizarre little sections that make you wonder what is going on in Congress. Here are some examples of strange things you will find.
1. If you have a child, you usually get to claim more deductions. In our fractured society, however, the tax code is a mess when it comes to dealing with divorces. The question is basically which parent gets to claim what? There are all kinds of rules, but one of the stranger ones has to do with…kidnapping.
If your child is kidnapped, you may get to claim the child tax credit and so on. Being a tax issue, there are some strange rules. For instance, the kidnapping cannot be by a family member! If your brother drags your child off to Canada, you get no deduction. You can read IRS publication 501 to figure it all out if you are insanely bored.
2. Jury Duty - Nothing beat jury duty, eh? Sit for eight hours and get paid five or ten bucks. Well, some business owners are good members of society. They will pay you normal wages while you do your civic duty. If they do, you can claim a deduction if you pay them back your earnings from jury duty. Boy, I bet your boss is going to be happy as pie when you give him or her that $5! On the other hand, a deduction is a deduction.
3. Tax Benefits of Being Blind - This one is an old favorite. The government is going to give you a break if you are blind. Just check the box on line 39A. Huh? You are BLIND! Obviously, the idea is you are having someone else do the tax return, but it is still pretty funny at first glance.
The above represents only a small sampling of the oddities found in the tax code. There are plenty other such as rules regarding issuing 1099s to fishing boat crews, but we have to stop somewhere. At least now you know that you are not alone wondering if the tax system makes any sense whatsoever. If you get frustrated, take comfort in the fact former President Jimmy Carter said the U.S. tax code was a crime against humanity!
By: Richard A. Chapo
Article Directory: http://www.articledashboard.com
Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax deductions.
Tax Deductions For Truck Drivers - Apply & Save
Before I share with you some of the great tax deductions that will save you $100’s of dollars on your yearly taxes, I want to share with you the mind-set of saving with your unique opportunities, and how it can mean the difference [...]
Work From Home? Time to Think About Tax Deductions
Paul at Wise Bread has put together a list of 101 tax deductions for bloggers and freelancers that is interesting and thorough. Some are obvious, some are unusual and some are probably audit bait. (like writing off your dog as security?)
Standard Income Tax Deductions That Reduce Your Income
Other deductions that are less common include medical expenses and expenses related to child care, but a professional tax person should be consulted if you have a complex tax return with lots of unusual deductions.
Tax Deductions: Above-the-Line, Standard, Itemized, and Miscellaneous
I’m not enumerating miscellaneous deductions here because there are simply too many. All the links point to the official IRS web site for that topic. Every tax deduction has a unique set of qualification rules. Out of 19 tax deductions [...]
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