Tax Planning - First $2,400 of Unemployment Benefits Tax Free for 2009

If you receive unemployment benefits this tax year (2009) all or part of it may be tax-free.
The American Recovery and Reinvestment Act, makes the first $2,400 of unemployment insurance exempt from tax. So you can exclude the first $2400 of these benefits when you file your tax return next year. If you are married, the exclusion applies to each spouse separately.

Tax Planning for 2009 Tip 422

New Car on the Brain?

If you purchased a new vehicle* after Feb 16th of this year, 2009 -- or if you plan to purchase one before January 1st, 2010 - you may qualify for a deduction of the state and local sales taxes paid on the vehicle, with a purchase price of up to $49,500.

You qualify for the deduction even if you do not itemize.

The deduction is phased out between $125,000 and $135,000** if you are an individual, and between $250,000 and $260,000** if you are filing a joint return.

You'll claim the deduction on your 2009 return.

This may be as good a time as any to satisfy your desire and help the economy out at the same time. Can you say win-win?

* car, light truck, motor-home, motor-cycle.

** your modified adjusted gross income (MAGI).

Left Money on the Table?

Love to find some hidden money?
If you think you may have overpaid the IRS over the last couple of years, you may be right.
Take a look at your tax returns for the last two years, 2006 and 2007, and you may even go as far back as 2005, if you filed an extension for that year. There may be money hiding there. Can you think of a better time to go get it?
Think back.
Did you take all of your deductions?

Who's First on Your Payroll?

Some think of it as a platitude, I think it is a major financial tenet - what am I talking about? Pay yourself first. Your ability to build wealth should not be placed on the back burner, it should not be an afterthought, it should not be somethng you get around to after Peter, Paul and Mary have been paid, it should be your first priority.

An easy and painless way to do this is to have your payroll department deposit a fixed amount or percentage into a specific savings account. You can also request that a portion of your tax refund be placed into that account [the IRS will direct deposit your refund in up to 3 accounts - use Form 8888]. From this holding fund you can make your investment decisions at intervals that are appropriate for your financial goals.

Charity Begins at Home.

Deducting Charitable Contributions at Tax Time.

Many of us do good during the year, making both cash and non-cash contributions to charitable organizations. We often forget however, that we are able to take a tax deduction for those items we donated come tax time. To do this, a little housekeeping is necessary.

• First off, to take the deduction, you must itemize your deduction on Schedule A. Your itemized deductions must exceed your standard deduction in order for it to be of greater benefit to you, than your standard deduction.
• The contribution must be made to a qualified organization, not to an individual, political organization or political candidate.
• The cost of games of chance, raffles or bingo cannot be deducted, and if you get merchandise or admission to an event in exchange for your donation you will need to deduct the fair market value of the merchandise or ticket price you received from the donation amount, to determine the dollar amount that can be used as a deduction.
• If you donate stock, it is generally valued at the fair market value.
• The old stuff from your kitchen or your linen closet that you wouldn't give to another family member does not qualify for a deduction. Donated household items and clothing must be in good condition to qualify.
• Written bank records or records from the receiving organization are required and should be retained. It should indicate what the donation was, the date it was made and the dollar amount of the donation. If your donation exceeds $250, the organization needs to indicate whether you received benefits in exchange for your contribution.
• If your total contributed property is greater than $500, IRS form 8283 will be required.
• If the value of your total contributed property is greater than $5000 IRS form 8283 will also be needed and items must be appraised by a qualified appraiser.
• You cannot deduct the time or value of your sevices, however you can deduct the items used while carrying out the charitable service.
• You can also deduct the miles driven to provide charitable deeds or donate products. In 2009, the rate is 14 cents per mile.

So keep doing good, keep good records and watch as your tax liability is whittled away.

Are You Up to Date on Your Tax Returns?

Are all your tax records in order? Have you filed all your returns? If you have not, what's preventing you from completing this task? Not filing your return when you are required to can get pretty expensive as penalties and interest start accruing on the due date of the return. If you do not file timely, you could also forfeit a refund that was due to you. You generally have 3 years from the original due date of the return to make a request for a refund, so lets not leave money on the table. If the return you have not filed is not the current year return, make sure that you use the correct forms for that year.

Don't Leave Money on the Table

In these economic times, leaving money on the table is not an option.
Please remind your families, friends and people who are needy in neighborhoods that your churches may serve, people who may not have families to care for them, that the deadline to file a 2007 return to qualify for the Economic Stimulus Package, is October 15th. Many people who do not normally have to file a return believe that they are ineligible for the Stimulus Package, but that is not so. The average payment is $600 ($1200 for married couples), plus $300 for each child (must be under age 17 as of December 31st 2008), who also qualifies for the Child Tax Credit.