The IRS Deductions Blog

Posts Tagged ‘income’

Question: Can someone help me with this economic homework?

Medicare recipients pay a monthly premium for coverage, must meet an annual deductible, and have a copayment for doctor’s office visits. Few years ago, President George W. Bush introduced some coverage of prescription medications (prior to that, there was none). What impact would an increase in the monthly premium have on their consumer surplus or economic well being? What would be the impact of a reduction in copayments?

Answer: Well I pay that monthly premium of $110 like everyone and on a low income it is a lot. I hope there is no increase on that premium except on upper income people. The Medicare Part D is what Ted Kennedy put through Congress and Bush signed. Every year, it has fewer medications that are covered, to save the government money. You are wrong in one respect, there is no annual deductible but we do pay 20-40% of charges for all medical services and treatments. Some of that may be paid by Medicare supplemental policy which costs around $150 a month.

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To amend part B of title XVIII of the Social Sec. Act to provide for a prescription drug benefit with a high deductible at no add. premium and access … certain low-income Medicare beneficiaries. $10.21 The BiblioGov Project is an effort to expand awareness of the public documents and records of the U.S. Government via print publications. In broadening the public understanding of government and its work, an enlightened democracy can grow and prosper. Ranging from historic Congressional Bills to the most recent Budget of the United States Government, the BiblioGov Project spans a wealth of gover…

Family Fighting Insurance Company Over Kids’ Medicine

A North Texas family is in a very expensive fight with their insurance company over the medical needs of their children. Right now, Ricky and Sharon Free are paying $1,400 a month out-of-pocket, but the medicine was fully covered just three months ago.

Senior Care Concierge Medicare 2011 part 5 Enrollment Periods

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.

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TurboTax Home & Business Federal + State + Federal efile 2009 $42.89 TURBOTAX HOME & BUSINESS WITH…

J.K. Lasser’s 1001 Deductions and Tax Breaks 2012: Your Complete Guide to Everything Deductible $9.98 A straightforward guide to taking tax breaks and deductions on your 2011 tax returnCompletely revised to reflect important changes in this year?s tax laws, J.K. Lasser?s 1001 Deductions & Tax Breaks 2012 will help you take advantage of every tax break and deduction that you may be entitled to. This comprehensive guide is clearly organized by subject matter so you can easily find situations that ma…

J.K. Lasser’s 1001 Deductions and Tax Breaks 2011: Your Complete Guide to Everything Deductible $14.96 A straightforward guide to taking tax breaks and deductionsCompletely revised to reflect important changes in this year’s tax laws, J.K. Lasser’s 1001 Deductions & Tax Breaks 2011 will help you take advantage of every tax break and deduction you may be entitled to.This comprehensive guide is clearly organized by subject matter so you can easily find situations that may apply to you. Each tax benef…

J.K. Lasser’s 1001 Deductions and Tax Breaks 2010: Your Complete Guide to Everything Deductible $4.99 A straightforward guide to taking tax breaks and deductionsCompletely revised to reflect important changes in this year’s tax laws, J.K. Lasser’s 1001 Deductions & Tax Breaks 2010 will help you take advantage of every tax break and deduction you may be entitled to.This comprehensive guide is clearly organized by subject matter so you can easily find situations that may apply to you. Each tax benef…

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: I owe Uncle Sam money this year in taxes. Is there anyway I can invest my money so I’ll have to pay less?

I just finished doing my taxes but unfortunately, this year I owe Uncle Sam a descent amount of money (more than 5K).

I have already maxed out my 401K and I am not eligible for IRA due to income limits. So what can I do before April 15th 2009 to reduce my tax bill for 2008?

I heard you can invest in tax-deffered Annuities and claim it as tax deduction. Is that allowed? Do I have any other options to keep my money legally?

Answer: It’s too late to reduce your taxable income for ’08 – except for deductible contributions to a traditional IRA – but since you contribute to a 401k, you’re not eligible for deductible contributions. Note that you can still contribute to a traditional IRA with post-tax dollars, and your investment growth will be tax-deferred until you retire. You may even qualify for a Roth IRA but that too is post-tax dollars (not deductible).

You can invest in muni bonds or tax-deferred annuities, but neither of those options will reduce your taxable income, they will just give you an investment vehicle where your earnings are tax-deferred until withdrawal (like the traditional IRA mentioned above). These will have a lower investment return because of the tax benefits.

Your best bet going forward is to sit down with a good CPA or a solid investment advisor in December to plan out ways to maximize your deductions (for example, paying some Deductible Expenses like your mortgage and property taxes in December instead of January). Also, if you invest in mutual funds, you can often swap funds to a bond fund or a money market in the same family of funds at no cost, avoid the year-end cap gain distributions, and then move your money back after 31 days. Be careful, because if you move your money back within 30 days, the IRS considers that a “wash sale” and you’ll be considered as having held the investment the entire time.

Hope this helps!

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Time to Get Ready for Taxes

This year’s filing season has a key difference worth noting. That’s the tax filing deadline.

Roth IRAs

Question: Married Filing Seperatly in Community Property State: Who can claim mortgage interest and children?

I live in California, a community property state and have been living apart from my wife since October of last year. While married, I earned most of the income (my wife worked about 12 hours per week) and paid the mortgage bills. Now we are getting a divorce and she is being uncoroperative about getting the taxes done. Can I file married seperatly and claim the deduction for my kids and our home mortgage and if I do, will she be entitled to half of my refund since we are still married and in a community property state?

Answer: yes

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First-Time Landlord: Your Guide to Renting out a Single-Family Home (USA Today/Nolo Series) $14.50 Whether or not you call yourself a “landlord”, when you rent out a house you’ll want to do it right! The “Landlording 101″ course for new rental property owners who are first-time landlords by way of an inheritance, divorce, investment, purchase for a family member, or a move to a new house. 90% of small properties are owned by individual landlords, and millions in this group are balancing their …

TurboTax not updating for same-sex couples

Reversing a promise made earlier, the makers of TurboTax disclosed on Friday that it will not update its tax-preparation software to provide step-by-step guidance for same-sex couples in California, Washington and…

Self Employment Tax Tips : Tax Tips for Ministers

Question: Had to recharacterize Roth contributions to Traditional IRA… now back to Roth in 2010?

In 2009 my husband and I each contributed $5000 to our Roth IRAs. We are a good 30 years from retirement. When we got our tax returns in order a couple of months ago we realized we had exceeded the limit for Roth and we had to recharacterize these contributions into Traditional IRAs. Now that 2010 is here and there is no income limit for rollovers, would we have to pay taxes on the rollover even though the contributions were already taxed in 2009?

A related question: If we were to contribute another $5k each for 2010 to the Traditional IRAs could we rollover this to the IRAs by the end of FY2010? In other words, is it possible to add the 2010 funds and then rollover? We are above the deductible income limit – so what taxes would then have to be paid in this scenario?

Answer: You are misusing the term “rollover.” If you are above the deductible income limit for traditional IRAs, it makes no sense to contribute to them – especially since you are 30 years away from retirement. Make your 2010 contributions directly into the Roth IRA(s) instead.

If you want to convert the traditional IRAs to Roths, 2010 is the year to do so because you can spread the tax bite out over two years.

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Not too early to think about 2011 taxes

The Bush-era tax cuts have been extended, the alternative minimum tax is patched and capital gains rates are set.