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TaxMama s TaxQuips Home Schooling

2015-02-23 by Eva Rosenberg

Homeschool Textbooks and Other Reading MaterialToday TaxMama® hears from Sharonda in the TaxQuips Forum with this fun topic, let me re-phrase. “I have a new client that home schools her children. What tax breaks are available to her?”

Dear Sharonda,

That’s an excellent question.

IRS Pub 529 talks about Educator Expenses . Alas, qualified education expenses for teachers do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education.

Here’s a good article about this topic. It refers to states that have tax credits…
http://a2zhomeschooling.com is a generally good site for people who home school.

TaxGirl offers an interesting analysis...but still ends up with my same conclusion.

Here’s something to think about. If this woman is home schooling, she probably knows other who are as well. They might be able to form a local organization where, perhaps there is a way to pool resources, cut costs, and share the teaching duties for the various subjects – as each parent may have an area of expertise to offer. By creating a school, they might be able to generate deductions.

And remember, you can find answers to all kinds of questions about home schooling and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 2MB) or listen now...

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Crowdfunding for Medical Costs

2015-02-16 by Eva Rosenberg

Crowds geting ready for crowdfunding Today TaxMama® hears from Josh in the TaxQuips Forum with this interesting question, let me re-phrase. “I want to raise money for a family member who is ill, using crowd-funding. What’s the best way to do this with the least tax impact?”


Dear Josh,

That is very kind of you. But the way you describe will hold YOU responsible for the income. You will get no deduction for the ‘donation’ to the family member.

Have this person open up a new bank account specifically to receive these funds. It must be in their own name and Social Security number. You may be co-signer on the account. You may not use the funds for your own benefit. Be very careful about that.

Medical crowdfunding sites specify that the donors will NOT get a deduction for
these donations. They are purely voluntary, as gifts. Your family member will not have to pay taxes on the funds.

Be sure that nothing is promised to the donors – no kinds of rewards or anything for their donations – or this could be turned into ‘sales’. Instead, as incentive, let them know that you, or the individual, will be posting updates and photos about his/her condition, mood, etc. And let them know where to find the updates – FaceBook, a WordPress site,
Blogger, etc. (all of them are free). FaceBook requires a login to use. The others don’t.

This is an interesting way for people to get help. And while the donations are not deductible, it’s a great way to help people you care about.
And remember, you can find answers to all kinds of questions about crowdfunding and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
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Asking After the Fact

2015-02-09 by Eva Rosenberg

ASK Today TaxMama® hears from several people in the TaxQuips Forum, with questions asked too late. Here are some questions that should have been asked before you entered into your financial transactions – not when you file your tax returns.

 

Dear Friends,

It boggles the mind to have questions come to us when it’s too late for us to help out. Here are recent questions, where we, or a competent tax pro, could have prevented or reduced the taxes – if only we had been consulted in advance.

1) Taxpayers live in a camper and work all over. They have no permanent home to be away from. None of their travel expenses are deductible. If they had done some planning in the first place, they could have established a solid tax home in Texas – and taken the necessary steps to qualify it as a home. Could have wiped out most of their taxes.

2) Taxpayers inherited an annuity from mom and split it six ways. NOW, they are asking about the tax consequences. The estate’s executor could be responsible for the taxes if the other heirs don’t pay up. She is responsible for the decedent’s final tax return, as well as the estate tax return. And now that she has distributed all the money, she’ll have to pay the costs herself if she can’t get the heirs to chip in.

3) Taxpayer is trading in puts and calls. After a year’s worth of activity, now he is asking about the tax treatment of his activities. Learning in advance, you can set up your records to give you the specific data you need at tax time. Knowing the tax effect as you go along, you can make trades to keep your profits high and taxes low.

4) Taxpayer is doing odd jobs for Grandmother and getting compensated. Is this income or a gift? And how do Grandmother and grandson handle the reporting? Naturally, this is asked after the filing deadline for W-2s to be issued to household employees.

My friends, when it comes to your finances, please, don’t begrudge the few measly bucks you must pay to a tax professional. Schedule a planning appointment before you do something costly – and stupid.

And remember, you can find answers to all kinds of questions about tax planning and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


W-4 Time

2015-02-02 by Eva Rosenberg

Save your paystubs and update your withholding

Today TaxMama® hears from Bingo1 in the TaxQuips Forum, with this disturbing question. “On the w4 form I believe the amount for line 5 is 2 because my husband is the only one working and I don’t work. I have two kids. Is that correct? My CPA told me I should use 1 on line 5. But I believe that is wrong. Please let me know.”

 

Dear Bingo and Friends,

There are three issues I want to cover today:

1) This IS the time to file new W-4s with your employers to instruct them on what to withhold from your paychecks for 2015.

2) If you are already working with a CPA or Enrolled Agent who has given you guidance on what to enter the Form W-4, why would you doubt them? If you really believe they don’t know what they are talking about – don’t work with them. But if they are competent, why second-guess them?

3) The IRS instructions for the Form W-4 are so confusing that it took a tax pro 25 pages to explain them. Don’t waste your time trying to follow them. The size of your family is meaningless. What matters is the joint income and the allowable deductions or standard deductions, your tax credits and the net tax liability that results. This means, to get the withholding right, you must do a projection of your expected tax liability for the year. Then you can follow a really old TaxMama® strategy with only 5 simple steps (from a 2005 TaxQuip).

And remember, you can find answers to all kinds of questions about withholding and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


TaxMama's TaxQuips Mortgage Unpaid

2015-01-26 by Eva Rosenberg

ForeclosureToday TaxMama® hears from GADS in the TaxQuips Forum, with this issue that I probably should not make public: “A 2 family house has been rented for the last 5 years. Both units are rented. The owner stopped paying the mortgage 18 months ago. He still is collecting rents and reporting them on Schedule E. Since he has not paid any property taxes or mortgage interest those items cannot be deducted. The bank is starting foreclosure proceedings. T Add Mediahe question is: Can he still take depreciation?”

 

Dear GADS,

What a genius.
Or a jerk.

Yes, he must report all the income.
He may only claim expenses that he has actually paid.
Yes, he may claim the depreciation.

And…when the bank forecloses and reports the balance of the debt that has been cancelled, they will include the amount of the accrued interest in that balance.

So when you report the cancellation of debt, you will also get to deduct the interest that they have not paid, and probably also the property tax that the bank paid to protect their interest in the property – and added to the balance of the loan.

See…pure genius.

And remember, you can find answers to all kinds of questions about fiscal irresponsibility and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 2MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments



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