The IRS Deductions Blog

Archive for February, 2010

Question: What is a deductible?

I have my car insurance with geico and on the “coverage details” page i’m looking at, it says that i have a $500 ded. (comprehensive) and a $1000 ded. (collision). Geico explained this to me before, but I really don’t remember exactly what this means. Can someone please explain this to me so I know if I need to make changes or not? Thanks.

Answer: Your deductible is what you have to pay before the insurance company pays anything. Your comprehensive coverage covers, fire, theft, vandelism, glass breakage and your collision covers you for “at fault” accidents. Depending on what kind of car you have, the $500 on comprehensive is kinda high. Most windshields don’t cost $500. I would think about lowering your deductibles to $250 comprehensive and $500 collision. You’ll be surprised, it’s not going to cost you that much more to change the deductibles.

Items on Amazon Right Now for Geico Deductibles:

9 tips: Getting the right insurance

Tailoring your coverage to your circumstances can save you thousands a year while keeping you better protected. Here’s what to look for and what to avoid.

Items on Amazon Right Now for List Of Tax Deductible Organizations:

NASDAQ OMX Announces Fourth Quarter 2009 Results

NEW YORK — The NASDAQ OMX Group, Inc. today reported net income attributable to NASDAQ OMX of $43 million, or $0.20 per diluted share, for the fourth quarter of 2009 compared with net income attributable to NASDAQ OMX of $60 million, or $0.28 per diluted share, in the third quarter of 2009, and net income attributable to NASDAQ OMX of $35 million, or $0.17 per diluted share, in the fourth …

ADRA Thailand – Keep Girls Safe Photo Presentation

Question: Can you please explain Tax Deductions in detail?

I get the basic gist that you don’t have to pay taxes on whatever amount you deduct. But I don’t understand how you claim deductions and what is claimable. Are tuition and student loans able to be deducted? What is a standard deduction vs an itemized deduction? Why do most people have a standard deduction and at what point would you do an itemized deduction?
What are the general tax brackets and how do they play into it?
Thanks
I am a married student and I have a bunch of student loans. My husband is the primary income earner of our household since I’m in school. We rent a house. I’m probably going to give my car to charity and sometimes we make other charitable donations.
What sort of things could I/ we claim as a deduction?

Answer: First there are adjustments to your income. All your income is added and there are certain items that you can reduce your income by. Some items are the tuition and fees deduction, educator expenses, health savings account deduction, moving expenses, student loan interest, alimony paid, self employment adjustments, and the big one is IRA deduction. These are added and then subtracted from total income to arrive at your Adjusted Gross Income. The AGI is used in many places in the tax preparation to determine limitations.

Then you are able to deduct the standard deduction for your filing status. Example $5450 for single, $8000 for head of household, and $10,900 for married filing jointly. There is additions to these figures if the taxpayer is age 65 or older or blind. Also this year certain real estate taxes may be added to these figures if the taxpayer does not itemize deductions.

Now for Itemized Deductions. If you have more itemized deductions than your standard deduction, you may use the higher figure to reduce your taxable income. Certain items included in itemized deductions are medical expenses that exceed 7-1/2% of AGI, taxes paid such as state and local income or sales taxes, real estate taxes and personal property taxes. Also qualifying home mortgage interest, charitable contributions, work related expenses that exceed 2% of your AGI, casualties and theft losses, gambling losses, up to gambling winnings, and many more items.

After your standard deduction or itemized deduction is taken off your AGI, then you deduct $3500 x the number of exemptions you are claiming on your tax return. This creates your taxable income. This is when you use the tax tables to figure your tax based on your filing status. The tax brackets vary depending on your filing status from 10%, 15%, 25%, 28%, 33% and 35%. The first part of your income is taxed at the 10% and if you have higher than this bracket the next block of income is taxed at 15% and so on.

Next you are able to deduct a variety of credits from your tax. These credits cannot reduce your tax below zero, so they must be taken in order. Some of these credits are the Child and Dependent Care Credit, Education Credits, Retirement Savings contributions credit, the Child Tax Credit and more. Some credits you might not be able to claim due to too little tax.

Next other taxes are added such as self-employment tax, additional tax on withdrawal from IRA or other retirement plans (the 10% penalty), and other taxes. This will end up being your total tax.

The payments that will offset this tax are the federal income tax withheld, estimated tax payments, Earned Income Credit, Additional child tax credit (if you did not receive the full amount above and have earnings above $8500) and other credits.

If your payments are more than your total tax you will have a refund. But if your total tax is higher than payments then you will owe.

Laura H – H&R Block – Senior Tax Advisor 5
**This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.

Items on Amazon Right Now for Itemized Deduction Vs Standard Deduction:

Mortgage vs. savings a personal as well as financial decision – Tue, 13 Jul 2010 PST

Q.I’m 28, single, and just received an $86,000 inheritance. I don’t know if I should pay off my mortgage ($79,836) or invest for retirement. If I pay off my mortgage, I’ll lose the tax deduction. Any thoughts? – Angela P. A.This is always an interesting question. Here are several ideas to consider.

H.R. 4462 Haiti Charitable Deduction Bill: Rep. Charles Rangel

Question: Should I take the standard deduction or itemize deduction on my 2009 taxes?

I need to know what way to go on my taxes. I am married and have two children, both me and my wife work and are combined income is about 58,000-60,000. We donate a little but not really enough to make a difference on our taxes. We don’t have that much in medical bills. I would like to get back as much as I can so can you please let me know what way would be the best and benefit me the most.

Answer: If you do not pay interest on a mortgage, most likely that the standard deduction will be best for you. But the way to be sure is to calculate your taxes both ways and see which minimizes your taxes.

Items on Amazon Right Now for 2009 Standard Deduction Child:

No capital gains due for some investors

Some taxpayers won’t pay any capital gains tax. Find out if you are eligible for this break.

Question: what is the best health insurance What is the best Health Insurance plan for me and my wife in south Jersey?

I want to buy Health Insurance for me, my wife . I live in south Jersey. I can spend about 300 monthly for Insurance.We are in mid of 30th & we are going to have a baby next year. What all I should look for? It is so confusing. PPO, Deductibles, Coinsurance, and all these plans… I know only a little, and it is very hard making a choice. Please Help!

Answer: Visit your state insurance department’s Web site. You’ll probably find a list of companies selling individual coverage in your state, including those that aren’t handled by brokers. For example, many BlueCross/BlueShield plans — often one of the few choices available in highly restrictive states — prefer to deal directly with customers, or offer such low commissions that they aren’t worth a broker’s time.

The insurance department may provide shopping tips for your state, as well as insurance-company complaint records.

It is a good idea to check with a qualified insurance agent before purchasing a health insurance policy. Health policies can get very complex and can hidden coverages/non-coverages. Start by getting a quote at: http://www.insureme.com/landing.aspx?Refby=614499&Type=health. This web site will allow you to compare prices and find the best price and coverage. It is free of charge and they even give you the option to speak to local agents if you have questions.

I hope that helps!
Ron @ InsureMe

Items on Amazon Right Now for Deductible And Coinsurance:

Retirees burdened by steep medical expenses

Health care is one of the biggest costs to plan for in retirement, even with the federal Medicare program providing basic coverage to Americans ages 65 and older.

Comple-MED (TM) – An Innovative Solution