The IRS Deductions Blog

Archive for the ‘Itemized Deductions’ Category

Question: When I can already itemize my medical expenses as deductions, how does McCain’s plan really benefit anyone?

Besides…if you ca’t afford to pay fopr your insurance up front, you don’t get a credit? Sounds like a big NOTHING to me!

Answer: You can itemize, but you will only be able to deduct the amount that exceeds 7.5% of your income. So if you made $100,000.00, and had $10,000.00 in medical expenses, you would be able to deduct only $2,500.00. That then gets multiplied by your tax bracket (so lets say it’s 28%, Your tax benefit of the 10k in medical expenses would be $700.00 in this case. McCain wants to change that, and actually give everyone a tax credit of 5,000.00 if I’m not mistaken.

Items on Amazon Right Now for Itemized Deductions Medical Expenses:

Taking Advantage of Miscellaneous Deductions

These catch-all expenses offer another way to cut your tax bill, but only if you have enough of them.

How To Do Your Own Taxes Guide

Question: Claiming 2 dependents (me and my husband)?

I’m married. I make more money than my husband, though I only claimed one dependent on my w2 this year – though the worksheet (which I didn’t understand) said I could choose 2, since we both work. We live in SC, and we have no children (2 dogs). I was told that by choosing two though, I run the risk of owing the IRS money in February – because they’ll take out less taxes during the pay weeks. Does anyone have any advise? I’d rather not owe the IRS anything, and make less weekly!
Also, I do itemize my taxes because of my Mary Kay business. I was told that may help me as well – though I don’t know what kind of deductions I’m looking at (I didn’t file it last year)…. I know that was vague… but I would like some hints.

Answer: First of all, on your W-4 worksheet it says you can claim an extra exemption if you are married and your spouse does NOT work, so that doesn’t apply to you, so you did right by claiming one. Whoever told you that if you claim 2 (especially if your spouse claims 1) you risk owing when you file is correct.

Now, the Mark Kay business. You don’t itemize for that. You show the business expenses on a schedule C along with the income. That has nothing to do with itemizing, which is a different process and has to do with personal expenses, not business expenses. You still can deduct the business expenses even if you don’t have enough deductible personal expenses to itemize.

Depending on how much you make on the Mary Kay business, unless it’s very little, you should probably be making quarterly estimated payments for that. (I assume you are saying that you have a job where you are an employee in addition to the Mary Kay). If you aren’t making quarterly payments, you will most likely end up owing at tax time due to the taxes on the Mary Kay income.

The best advice I can give is to see a CPA or enrolled agent (NOT Block, Hewitt or Liberty) as soon as you can. From your question, there is a lot you don’t understand about taxes, and you’d be wise to get that sorted out before the year ends, while you can still do something about it.

You say you didn’t file last year. Were you doing Mary Kay then? If you had $400 income from MK, even if you didn’t have another job and didn’t file a joint return, you were required to file.

Items on Amazon Right Now for Tax Itemized Deduction Worksheet:

Tax Tip: 6 facts about choosing the standard or Itemized Deductions

When filing your taxes, you can choose to either take the standard deduction or to itemize their deductions. The IRS has put together the following six facts to help you choose.

Question: Tax deduction (itemized or standard) rules in Arizona?

I file as “head of the household” and my wife files as “married filing separately”. For federal return, I can take standard deduction while my wife itemizes deduction. Can I do the same thing for Arizona State return?

Answer: State returns are based on the federal return and must be filed the same for status.
You and your wife can only file married-Joint or Married-Filing separately on both returns.
The joint return has a lower tax liability,but the separate filing allows one spouse to take deductions that they can’t take jointly-ie:medical expenses.
The spouse with a lower income may meet the requirements to take such medical deductions and may therefore actually get a bigger refund overall.
It is best to figure all possible filings to see if a larger refund can be found or a smaller tax liability.

Items on Amazon Right Now for Federal Tax Itemized Deductions:

Woman with Weston ties sentenced for mortgage fraud

Mary Ellen Durso, 54, of Milford, was sentenced on Wednesday, March 9, for her role in a mortgage fraud case that also allegedly involved Steven Kottage and Genaro Hathaway of Weston. David B. Fein, United States attorney for the District of Connecticut, announced in a written statement that U.S. District Court Judge Mark R. Kravitz sentenced Ms. Durso to three years of probation, the first six …

Itemized deductions extended

Question: Simple question about itemizing assets?

Hello, I hope that I will ask this question correctly. If I barely reach the itemizing threshold (is it $5000+?), will that save me more on taxes than a standard deduction? Or does it only matter if I greatly go over my itemization limit? Because I recently found out that dental, hospital visits, and prescription drugs are tax deductible and I was never told that before. Combined with my mortgage and property taxes paid that may bring me close to that itemization threshold. I live in TN.
I make $30k per year.

Answer: The std deduction is $5700 per person. You can only deduct unreimbursed med expenses that are OVER 7.5% of your AGI, but if even then you’re over the $5700, it would save you some money. The savings would be the amount your Itemized Deductions are over the standard, times your tax bracket %. So if your itemized deductions total $6000, and you’re in a 15% bracket, you’d save $300 times .15, or $45.

Items on Amazon Right Now for Itemized Deduction Limit:

Top Tax Tips For Retirees

You’d think that filing taxes would get easier over time but unfortunately for retirees this just isn’t the case. In fact, many retirees will face additional hurdles in their tax filing as a result of new sources of income and special deductions.

Flood powerpoint

Items on Amazon Right Now for Itemized Deduction Phase Out 2010:

TYSON: New tax reforms may become law

I don’t get too excited very often by anything coming out of Washington, but I am optimistic about a little-discussed bipartisan tax-reform bill that has a good chance of becoming law.

Donating Real Estate – Daily TaxQuips – TaxMama.com