The IRS Deductions Blog

Archive for May, 2009

Question: What happens to the money in a health care savings account when you are no longer eligible?

I am changing jobs and this employer offers a HSA option that I find attractive. I like the concept but I’m concerned about what happens if I leave that employer down the road and the new employer does not offer a high Deductible Policy (i.e. I’m no longer eligible for the plan). I could always buy a policy myself above and beyond the HSA amount but I will likely prefer to handle this through my employer. Any info?

Answer: It sits in the HSA. You can still spend it on health care items, you just can’t add to it. (If you just take the money out before 65, it reverts to income and you owe a 10% penalty on it.)

Items on Amazon Right Now for High Deductible Savings Account:

Health savings seminar set for Jan. 13 at Pen Air

Pen Air Federal Credit Union on Jan. 13 will host a free health savings account seminar for business owners and managers.

CONGRESSMAN CARNEY TURNS ON HEALTH INSURANCE SAVINGS

If you want to know where you will get the best discount clothes, you will be happy to know that it is the internet. The internet is home to some of the best discount clothes around the world. All you need to do is look around enough on the internet to get the best prices on various garments. If you are looking for discount clothes for your entire family, the internet can save you a lot of money that you never knew you could save. Be it trousers, jeans, t shirts, skirts or more, the internet has everything you need when it comes to discount clothes. In order to get the best discount clothes on the internet, you need to do some specific research which entails going through a number of websites that provide excellent clothing options when it comes to discount clothes.

Once you have narrowed down on the particular website of your choice, you should now do a complete survey of the various discount clothes available there. You could be confronted with a situation wherein not all the clothes are discount clothes. Thus, you will have to read carefully as to which ones are discount clothes and which of them are not.

The internet has become the place of choice when it comes to buying discount clothes. This is because designers and manufacturers appreciate the widespread of the appeal of the internet when it comes to buying products and services. Be smart and make your way to a computer so that you can get the discount clothes you need.

Items on Amazon Right Now for Tax Deduction Clothes Donation:

Goodwill store in need of donations

The Goodwill Store of Bastrop recently received a donation of some nice furniture. Acting Manager Cleothis Johnson, pictured, is very proud of this store and loves the customers.

Donation Tax Deductions

Question: Estimated Taxes – what do I put in for line 2 of Form 1040-ES worksheet?

Im back for more freelance tax questions .

This time I have the worksheet in front of me and am doing this right now.

So this is my first year freelancing and I was dumb and didn’t pay estimated quarterlies. Fortunately I didn’t make much last year at my old job (internship) so my adjusted gross income of 2008 was only 19k. This year I AM planning to itemize but if I am basing line 1 of 1040ES (adjusted gross income) off of my 2008 income, what do I put in line two (deductions itemized or standard deduction).

Also, do I do one of these for each quarter I missed or am I just paying for this quarter only and paying the penalty for not paying when I do my taxes for 09.
I apologize, I forgot an important detail:

Do I put in Itemized Deductions for this year or is this another thing based on last year (like adjusted income)

Answer: It is for your deductions, either standard or itemized.

Items on Amazon Right Now for 1040 Standard Deduction Worksheet:

Action Line: Defining “head of household”

Dear Action Line: What is the ‘head of household’ tax return-filing status, and are all single people heads of household? – D.M., Tulsa.

Question: Are my childs uniforms for elementary school deductible on my tax return?

This is the first year he will be required to wear uniforms. I want to know if I can list this as a miscellaneous expense (must exceed 2.5% AGI) or if its an educational expense.

Answer: Those are very interesting answers so far.

However, I have to disagree with the flat answer of no they aren’t deductible. And, if they are they would be subject to the 2.5% AGI .

Now if you are talking about a private school it is not deductible. However, there are some public schools that are requiring uniforms now…these ‘might’ be deductible. I am not sure yet. This hasn’t been tested yet.

But, I am sure that it would have the same restrictions as other uniforms would apply…something that would not be normally worn otherwise.

And, no it has nothing to do with uniforms costing less than normal clothing.

Bostonian stated that the only educational expense is for higher education…this isn’t true either. There are exceptions.
But, generally he is correct (in almost all cases).

But, that is a moot point even if the uniforms are deductible they aren’t an educational expense…just a simple deduction.

So if I had to give a client a yes or no answer…I would ask if you want to be the one that spends a lot of money to test the theory for such a small deduction.

I would hope they say no.

Items on Amazon Right Now for List Of Tax Deductibles:

Premiums are key issue for health negotiators

Democrats started work in earnest Tuesday on difficult issues still standing in the way of their national health care overhaul after months of tortuous debate. Topping the list: How to help Americans pay for insurance premiums.

ADRA Thailand – Keep Girls Safe Project

Question: I receive a car allowance from my company, what part is deductible?

I receive a monthly car allowance of $650 from my employer and the amount is considered personal income. I understand that business miles can normally be deducted in this case but my company also pays for gas and some maintenance (oil change and tires). What if any part of the business miles can be deducted?

Answer: I don’t know how you are filing your taxes, but on Turbo Tax when they get to that point they ask about the amount of miles you’ve driven, the cost of maintence, etc.. and then ask you to deduct the amount of your allowance. I believe its spelled right out on the form. I believe the correct form you need to complete is Form 2016. The instructions lay it out pretty clearly.

Basically you can only deducted the expenses in excess of your allowance. So if they give you $650 toward a car, but your expense for the month was $850 then only $200 is deductible.

Items on Amazon Right Now for Maintenance Deductible:

Just sold!

Manhattan FLATIRON $750,000 33 E. 22nd St. One-bedroom, one-bath penthouse co-op, 800 square feet, with windowed kitchen, stainless-steel appliances, ebony-stained hardwood floors, beamed ceilings and crown molding; building features laundry and bike room. Maintenance $1,260, 55 percent tax-deductible. Asking price $775,000, on market 18 weeks. Brokers: Katherine…

Homeowner Association’s $75,000 part time maintenance man 3 days/week job