The IRS Deductions Blog

Question: Are the payroll tax and Massachusetts income tax deductible from ferderal income tax?

I know student loan interest, health care, and public transportation are tax deductible.

This in total takes $2,800 off my annual salary. There is also about another $9,000 for personal exception and standard deduction, and another $450 from losses in the market last year.

I just wanted to know if mass income tax of 5.3% is deductible and the 7.65% payroll tax are deductible.

Also are any federal, payroll, student loan interest, standard deduction, personal exception, etc.. deductible for massachusetts income tax? I haven’t been able to find any info on this while searching.

I guess I should add, is the personal exception different from the standard deduction?

Can I do Itemized Deductions and still use the $3,500 personal exemption?

Answer: You can deduct your state income tax paid if you itemize. You cannot deduct the payroll tax on your federal tax return. Half of your Medicare and Social Security withholding can be deducted on your Massachusetts tax return up to $3,000.

You can take your student loan interest as an adjustment on your 1040, not as an itemized deduction.

Health care can be deduction as long as it is greater than 7.5% of your AGI. If your health insurance premiums are taken out of your taxes pretax, you cannot deduct them as they were not subject income tax.

You cannot take both itemized deductions and standard deduction. It is one or the other.

Public transportation is NOT a deduction unless it was for work related activities and NOT commuting. It is also subject to 2% of AGI floor.

Federal taxes are not deductible on the MA tax return.

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Many changes in tax forms this filing year

When taxpayers sit down to file their 2009 returns, they will find plenty new to deal with as they look for refunds or get ready to pay the Internal Revenue Service by April 15.

Everyone wants to be rewarded; this reason is very warm among consumers to get rewards credit cards. Some are very popular rewards credit cards for instance, gas and airline credit cards. There are various forms of it, such as cash back, gift certificates, and travel miles. On the other hand, the finest way to know which rewards credit card is best for you; you need to take a look at your spending habits.

If it is important to get cash back in your hands, then this feature would be an important comparison point. Rewards are in various forms, that is, actual cash, gift certificates or applied to your monthly balance. Some companies offer as much as five percent (5%) cash on the buying of selected items. This is the most important deciding factor: how credit card holders are rewarded, that is, how do they buy back their points. Will you get real cash? Will you be forced to buy back your points by shopping at a specific place?

With rewards credit cards, APR is very important for the consumers who keep balance on their card monthly. Cardholders who use their credit cards for the payments of their bills, and they clear their monthly balance, will get better rewards from these cards. Customers who do not pay off their balance will find themselves with heavy APR interest charges since these cards are more costly.

Different card issuing organizations offer lots of benefits which are best and fit for you. If you do a batch of online shopping, then a card offers coupons and cash back for online buying and rate would be higher.

If you want to get more from your rewards credit card, you need to determine which card gives you more for your regular shopping. Like, it would not be sensible to select a card that gives you cash back on gas purchases, if you rarely buy gas because you work from home or take the bus. You should know about your spending pattern before deciding on a rewards credit card.

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Community, local business pitch in to help Unionville man who’s had no heat or electricity for past 5 years

When Ellis Mitchell got his college degree in accounting in the early 1970s, he figured his career path was set. He landed a job in King of Prussia and things were looking good.

Deductible Rewards

Question: If I make my tax deductible 4,000 IRA contribution this tax year, will I also be able to put 4,000 in a ROTH?

Answer: No. The total contribution is $5000 (or $6000 if you are age 50 and above), no matter how many IRAs you have. If you put $4000 into a Traditional IRA, you can still put $1000 into your Roth IRA.

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FINANCIAL CORNER – Time to Make New Year’s Financial Resolutions

If you want to accomplish major milestones you may have envisioned you may need to set some New Year’s financial resolutions.

Tax Deduction Tips : Tax Deductions for Cash Contributions

Question: Can you deduct your Mortgage Interest off your Indiana state taxes?

I know you can deduct property taxes, but how about mortgage interest? If not, what is the tax incentive to buy versus rent? Renters can deduct up to $2500. If you’re married and file separately, that’s a $5000 deduction, yet the Property Tax Deduction only goes up to $2500 and a large percentage of homes in Indiana don’t pay that much in property taxes. For example, mine was only $1465 for the year.

Answer: I think you only get that deduction off of your Federal taxes but it is figured in when you report your income on the State taxes by asking for your adjusted gross income.

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Homeowners must file new form to retain homestead tax deduction

Indiana homeowners have 32 months to fill out and file the new homestead verification form. If they don’t, they could lose their homestead deduction beginning in 2013.

Golf Community

Question: Are you able to claim deduction on 2009 new car purchase if you do not itemize deductions?

The new stimulus has a provision for new car purchases. If we buy a new car this year, can we claim this on our taxes next year even if we don’t itemize our deductions? Also-does this work the same for pre-owned or certified pre-owned for does it have to be brand new? This year our standard deduction was way more than itemizing. Thanks for any help you can give me.

Answer: Here is a synopsis of the deduction:

•New car buyers. Purchasers of new cars and trucks will be allowed to deduct sales or excise taxes. This is an above-the-line deduction, so you don’t have to itemize to claim it.

The deduction is limited to sales tax on purchases of up to $49,500. The deduction phases out for single taxpayers with adjusted gross income of more than $125,000, and married taxpayers whose AGI exceeds $250,000.

The amount you save will depend on your state sales tax rate and the price of your car or truck. If your state imposes a 4% sales tax and your car costs $40,000, the deduction will reduce your adjusted gross income by $1,600, says tax publisher CCH.

The deduction is limited to car and truck purchases made between the date the bill becomes law and Dec. 31, says Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants. Congress “is trying to get people to buy cars right away,” he says.

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Tax Season: Now’s the Time to Get to Planning

December 20, 2009 (Tulsa World, Okla.) As if you weren’t already rushed enough with last-minute holiday shopping and general year-end busyness, here’s a little something extra to throw into the mix — tax planning.

New Car Tax Perks