Tax Planning 2013
!!!!!!Notice!!!!!!
CASH CONTRIBUTIONS
A charitable contribution deduction will be disallowed for any monetary contributions (cash, check, etc) unless the donor maintains a record of the contribution. This provision applies to any contribution of money, regardless of the amount.
NON-CASH CONTRIBUTIONS
For individuals, partnerships, LLC or S Corporations, no charitable deduction is allowed for any contribution of clothing or a household item unless the clothing or household item is in good used condition, or better.
Find out Value of non cash donation
Go on internet Google (non cash donation value)
Value Guide for Donated Items
The rule above does not apply to any contribution of a single item of clothing or a household item for which a deduction of more than $500 is claimed if the taxpayer includes with his return a qualified appraisal with the respect of the property.
AUDITS-UP 50% FOR Schedule C(self-employed/sole proprietorship), LLC, 1065 and S Corp
**Underreporting of income–Businesses are not reporting all their income. Lots of self-employed and small business are not reporting income if they do not get 1099’s. IRS will be looking at those that have cash income and not reporting.
***Business Mileage–Businesses are not keeping good business mileage or they are writing off their vehicle expenses and not keeping good records that their vehicle expenses are business expenses.
****Inventory records–Businesses are not keeping good records for inventory and cost of goods sold.
*****Business expense–Businesses are not keeping receipts of business expenses. Cell phones, telephone expense-business are taking off 100% without proof they are business expense.
STANDARD MILEAGE RATE
2013
Business use …. $ 0.565
Medical/ moving (job) $ 0.24
Contribution……. $ 0.14
The standard mileage rate can be used for a vehicle that is either leased or owned by the Tax payer. The standard mileage rate is also applicable for Job-related eduction.
OPTIONAL STATE SALES TAX OR STATE INCOME TAX
You can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). You cannot deduct both. Generally, to figure your state and local general sales tax deduction, you can use either your actual expenses or the Optional State Sales Tax Tables.
DEDUCTION FOR NON-ITEMIZERS
A common misconception in tax filing has been that if you use the standard deduction versus itemized deduction you have little additional deductions available to reduce your taxes. THIS IS OFTEN NOT THE CASE.
TAX DEDUCTION OPPORTUNITIES FOR NON-ITEMIZERS
- IRA Contributions 5,000 per person or $6,000 age 50 or over
- Student Loan Interest (up to $2,500)
- Alimony Paid
- Medical Savings Account Contributions
- Moving Expense for job related movers
- 100% of self-employed health insurance premiums
- Self-employed SEP, SIMPLE and qualified retirement plan contributions
- ½ of self-employment tax
Income limitations often apply. But for those who qualify, the tax savings are can be significant.
STANDARD DEDUCTIONS FOR 2013
Married Filing Jointly… $12,200
Single Filer…… $ 6,100
Head of Household…… $ 8,950
Married Filing Separted. $ 6,100
Exemptions: 2013 $3,900 per exemption subject to phase out
**** Family Day Care Providers ****
Family day care Providers may used the actual meal cost or standare meal rate.
- Allowances Per Eligible Child
- Breakfast (1 per day) $1.27
- Lunch or Dinner (1 of each per day) $2.38
- Snacks (3 per day) $.71 each
Note: Only Food and beverage are included. Nonfood supplies are Not included and can be deducted separately
**** American Opportunity Credit ****
The American Opportunity credit is a nonrefundable tax credit of 100% of the first $2,000 and 25% of the next $2,000 for each of the first four years of post-secondary tutition and fees. The maximum annual credit is $2,500 per eligible student. The credit is per student per year. For 2013 the maximum annual credit is $2,500
Note: could be effective with your Modified AGI
**** Lifetime Learning Credit ****
The Lifetime Learning Credit is a nonrefundable tax credit of 20% of up to $10,000 of qualified tuition and fees paid during the tax year. The maximum credit is $2,000.
Note: could be effective with your Modified AGI
**** STUDENT LOAN INTEREST ****
The student loan interest deduction of up to $2,500 in 2013 will be Available to more taxpayers because the income range for phasing .