The IRS Deductions Blog

Posts Tagged ‘law’

Question: Can anyone explain the basics of what a few of these auto insurance words mean?

Bodily Injury Limits mean what? and :
Property Damage Limit
Medical Payments Limit
Uninsured/Under insured Motorist Bodily Injury
Liability Coverage means what?

Uninsured Motorist Property Damage would be what ?
Comprehensive Coverage & Deductibles are?
Collision Coverage & Deductibles
Emergency Road Service Limits ?
Rental Car Limits ? (Does this mean they give you a rental car ?)
Customized Parts and Equipment Coverage Limits means what?
Loan/Lease Gap Coverage is what kind of thing?

Answer: Bodily Injury – this covers injuries to people in other vehicles if you’re in an accident and are at fault. For instance, if you limits are 100/300, the insurance will pay $100,000/person up to $300,000/accident.
Property Damage – covers damage to property of others if you are at fault in an accident…such as the other person’s vehicle.
Medical Payments – this is a no-fault coverage. It provides medical payments regardless of who’s at fault to other people in your vehicle.
Uninsured Motorist bodily injury – provides payments for bodily injury to yourself and other passengers in your vehicle if you are hit by an uninsured vehicle
Underinsured Bodily Injury – this kicks in if the at-fault driver doesn’t have enough insurance to cover your injuries. So, say someone else hits you and you have $50,000 of medical bills. The other driver only has $25,000 of bodily injury coverage on their policy. Underinsured motorist would kick in the other $25,000.
Liability coverage just means it covers the other people in an accident if you are at fault and provides no coverage for you or your vehicle.
Uninsured Motorist property damage – this would cover damages to your vehicle if an uninsured driver hit you.
Comprehensive – covers damages to your vehicle by anything other then collision, such as fire, animal hits, glass breakage, theft, etc. The deductible is the amount that you are responsible for paying and your insurance would pay anything over that amount.
Collision – just as it sounds, covers your vehicle if you run into another vehicle or object. Again, the deductible is the amount that you are responsible for paying before insurance kicks in.
Emergency Road Service – usually this just covers towing, but could also include, lockout, gas delivery, etc.
Rental Car Limits – if you have a covered accident, your insurance company will pay for the rental car. There is usually a per day limit up to a total amount they’ll pay. So, $30/$900 would be mean they’ll pay $30 per day for the rental car up to $900 for the total time you have it.
Customized Parts & Equipment – this would cover any non-factory add-ons that you have on your vehicle, such as that subwoofer in your trunk.
Loan/Lease Gap coverage – if your vehicle is a total loss and you owe more to the finance company then the vehicle is worth, this coverage would pay the difference.

Items on Amazon Right Now for Limits Deductibles:

Jean Chatzky: A hard look at health care

I plan to set aside some time over the next few weeks and take a hard look at my health care costs. With all the changes last year — health care reform passed in March — this year’s due diligence is all the more important.

Tax Deduction Tips for Businesses : Filing Accrual Accounting for Taxes

Question: What does the lender look at on a Self Employed Tax return?

I am thinking about buying my first home. I have two years been self-employed (contract labor not business) and have tax returns to prove income. However, I am slightly confused at what the lender will be looking at. I was told that it is the adjusted gross income, but someone also told me the taxable income. I think the latter is wrong because it includes standard deductions, not business deductions, therefore I still brought that home. Can someone help me please?

Answer: i know that the lender will look at your adjusted income, but they will also look at your profit and loss sheets(schedule C), with the economy the way it is, any lender will be looking at the success of your business as well as your personal income.

Items on Amazon Right Now for Standard Deduction Self Employed:

6 new tax breaks for 2011

Taxpayers should be aware of these six new (or improved) breaks, such as a larger earned income credit and tax-free employer-paid parking.

Question: About tax deductible?

I am a self employed individual in Alberta Canada and i am curious as to what is considered deductible. i make roughly 60,000 per year and calculated (hopefully generously) that i should save about 20,000 by year end for taxes.

If i were to make a contribution of say 6,000 dollars to an rrsp would i then only owe 14,000 in taxes or would i pay taxes on 54,000 dollars for the year? As well information on what else is tax deductible (besides vehicle expenses i think ive got that covered) would be greatly appreciated
Also i will be collecting about $2500 monthly in living out allowance so how will that affect my taxes

Answer: 1) Regarding RRSP’s they reduce your taxable income (vs taxes owing)

2) Regarding the living out allowance any excess over a reasonable amount should be included in your income. Per T E (first link) a reasonable amount is $65 per day.

I’m not sure whether you worked at this location for the full year so I won’t fill in the numbers but your taxable income from the items mentioned in your question will = 60,000 + (2,500 x # of months) – ($65 x days) – RRSP contribution

I would recommend using Taxtips.ca calculator to get a rough estimate (2nd link) of your taxes payable.

Edit: To answer your original question I do not think there is anything else you’ll be able to deduct in relation to your employment.

Items on Amazon Right Now for Tax Deductible Self Employed:

How To Make Being Your Own Boss Less Taxing

The tax code offers numerous breaks for the newly (and the veteran) self-employed.

Self Employed Online Tax Deduction Tips for 2009, 2010

Question: IRS question starting a non profit organization?

I want to create a non profit organization to help pay for my own as well as other childrens private school education. Basically I would sell scrip and use the profit to pay for tuition. I would use on EIN numbe for banking only. I dont want to have to file as a none profit organization and pay the 300 dollar fee. I dont plan on making more then 5000 a year which would mean I would not have to file a tax return. Is it illegal at all to use the profit to pay for education since education is not able to be a tax deduction. Also is it illegal for my children to benefit from my non profit organzation?

Answer: Not gonna happen. You cannot form a non-profit organization that benefits a specific individual, in this case yourself and/or your children.

It would be OK if you formed one that would assist with the education of a specific disadvantaged group, say rural or inner-city youth, however neither you nor your children could receive any benefit from the organization.

Items on Amazon Right Now for Irs Tax Deduction For Children:

Taxpayers Anxiously Await Annual ‘Patch’ to Alternative Minimum Tax

Of all the tax issues facing Congress when it returns for a lame duck session after the Nov. 2 midterm elections, the annual rite of patching the Alternative Minimum Tax will be the most urgent.

The IRS And Your Taxes No Sex Nor Porn

Question: deductible question?

I am looking for my own health insurance. But can someone explain to me what exactly the deductible is?

If the deductible says $2000 does this mean if I break my foot or something I have to pay $2000 before the insurance pays the rest or does it mean they only pay the $2000?

Answer: The deductible refers to the amount of money that the insured would need to pay before any benefits from the health insurance policy can be used. This is usually a yearly amount so when the policy starts again, usually after a year, the deductible would be in effect again. Some services, like doctor visits, may be available without meeting the deductible first.

Items on Amazon Right Now for Deductible Explained:

RHAF requests help on Strand plans

Two members of the Red Hills Art Foundation recently requested help from the City of Louisville.

Collision Coverage – Car Insurance – What Does it Mean? Explained by Your Friends at Allstate