The IRS Deductions Blog

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Question: Tax calculation and deduction help?!?!?

am interested in learning how to calculate my own Tax Deductions. I have some, I know that are deductible (i.e. daycare, mileage to and from work, student loans, gas receipts). I would like to find out if there is a way that I can calculate this to see what I might be getting back from taxes. My husband is military and he and I are planning on using his mileage and gas receipts as well for his commutes while he was TDY.

P.S. I was self-employed until July 2008 and I am a home-owner. If this helps any.

Thanks.

Answer: For daycare and student loan interest, you don’t even have to itemize. If you qualify for a child care credit, and you probably do, you fill out form 2441 with your return.

If you are paying on a student loan. you can probably deduct some or all of the interest you paid for the year, and again this has nothing to do with itemizing. You deduct it in the Adjustment section at the bottom of page 1 of your form 1040 or 1040A.

Gas or mileage expenses (it’s one or the other, not both) get more complicated. Commuting expenses, mileage to and from work, are NOT deductible so you are out of luck there.

Without knowing what Itemized Deductions you might have, hard to be more specific on how to fill out Schedule A. On a joint return, you get a standard deduction of $10,900, so there’s no point in itemizing unless your itemized deductions are more than that.

Your self employment income will introduce some complexity to your return also.

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Question: In New York State what are the allowable Tax Deductions for contributions to the NYS-sponsored 529 plan?

Answer: You’ll get a New York State income tax deduction of up to $5,000 ($10,000 for married couples filing jointly) for contributions if you are a New York State taxpayer. If you are a resident or taxpayer of another state, you should consider whether that state offers a 529 plan with tax advantages or other benefits that are not available through this Program.

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Question: Looking for BEST jewelry Insurance for my Engagement Ring!! PLEASE READ?

We just got engaged and are currently looking into insurance. We heard that homeowners limits the amount covered by the policy. My ring is appraised at $7300. If we were to make a claim for a loss or theft, we would like to be sure that we arent given a check for depreciation etc We have also heard that insurance companies like to push thier personal jewelry on you after the fact, when realistically we would rather go Back to the same family jeweler that we use to replace this ring. It should be our choice where to replace it, or where we buy it. Is there an insurance that we can get STAND ALONE no deductible insurance. It seems like everyone wants to sell us homeowners too! PLEASE HELP!!!!

Answer: The best, cheapest way to insure this, is to add an endorsement to your homeowners policy to take away that theft limitation, and add “all risk” (aka the dog ate it) coverage.

For more money, you can ask for an “agreed value” endorsement on that jewelry floater, so that they cut you the check for the full amount. But it will cost more.

If you’re hell bent on stand alone coverage, you can buy it, but the coverage is going to START at $1,000 in premium. Per year. The reason agents are trying to sell you renters, is that’s the CHEAPEST, easiest way to get the most broad coverage for you.

Why pay more, for less coverage? That doesn’t make sense. Buy the renters, with the jewelry endorsement, with the ‘agreed value’ provision on it. Likely all together, it will cost you less than $400 a year. Less than half the cost of a stand alone policy.

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Question: Question regarding the conversion process that removes the income limit for ROTH IRA’s in 2010.?

I am not eligible for a ROTH IRA, but I have read of the provision that allows the converting of a non-deductible IRA to a ROTH IRA in 2010. The question is this: once I convert the funds in 2010 to a ROTH IRA, can I contribute to the ROTH account going forward or will I still not be able to since I do not meet the eligibility requirements? If I can only save for 2 years and then convert, but not able to put in more money, I do not think it would be worth it to convert. Does anyone know?

Answer: i would not make any financial moves on what is currently scheduled to happen in 2010. there could be many changes in congress (and president change) before then. that means current law could change many times before 2010.

keep saving and investing in taxable and non-taxable accounts but wait to see what happens with the Roth etc in 2009 and early 2010 before making any big moves. good luck.

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