February may be the shortest month - but this year it seems to be cruelest month as well. Not just for my husband and myself either. At a club meeting today I heard that a friend found out that in her second home, which she rents out, the toilet kept running when no one was around - she had to deal not only with the flood resulting from same but mold and a time limit to get it done as her new tenant was waiting to get in. Another friend found out her significant other has a serious medical condition. Our problems were just annoying - individually they would be an amusing story, but when the small problems keep coming - they add up.
We were eating lunch last Thursday - luckily at home - and husband let out a scream - and mumbled something about his teeth. I thought he broke a tooth or one came out or one moved out of place and he bit it and hurt his other teeth. No, his upper partial plate broke in half - he now had a left side and a right side. He was eating a very dangerous meal - cream cheese and jelly sandwich! He managed to glue the two pieces into his mouth adjacent to each other for a temporary fix. I called our dentist, but he only had morning hours on Thursday. I left a message explaining and asking him to call back - which he did almost immediately.
Now, we were planning, again, to go to Lancaster, PA for the day on Friday. It was our third attempt this year. Luckily the dentist could see us first thing in the morning so the trip to Lancaster started to fade away again. I had an idea. How long could it take for the dentist to repair the partial or take a mold for a new one? We would probably not get out until after 9:30 anyway. So we went ahead and put together everything we needed for the day trip. When we went to the dentist the next morning we put it all in the car. Dentist fixed the partial as a temporary thing - husband says the stuff used to fix it tasted vile. He also took a mold to make a new partial - we are going in tomorrow for a fitting for the new partial. Breathe a sign of relief that this was done.
We finished up in about 45 minutes - 15 minutes behind when we would have gotten out of the house to go on the trip and the dentist is closer to where we are going than our home. Had a nice day finally in PA. Managed the trip home using the detour to the Delaware River Bridge alright.
Monday we were out running errands in the car and we heard an odd noise. Not sure if it was just something in the car knocking around we bagged up everything in the arm rest, the glove compartment, and spare eye and sunglasses. The noise continued than stopped. Tuesday we went out and the noise was there again. Since we were planning a day trip to a quilt show out of state - originally tomorrow, Thursday, now due to the dentist on Friday - if it doesn’t snow - we wanted to make sure the car was okay and stopped at our mechanic. He checked the car and it was almost out of oil - and no, we are not the sort of people who don’t check same. He refilled the oil and put it up in his shop overnight to see if there was a leak. In the meanwhile husband went looking and found out that there is a problem with our year and make of car (as well as others) in which the oil is too hot and is used up. We will have to take the car to the dealer to have it checked for this - luckily covered by the manufacturer - it could result in needing the pistons replaced. Somehow I know this will take more time than we can easily spare the car for.
Today I had my embroidery chapter meeting and what was suppose to be my day out. I drove our van and came home quickly after the meeting to run errands with husband and go out to lunch with him (Ash Wednesday so he was looking forward to a fish sandwich out) as we had just our van to use. We picked up the car when it was ready and drove it a bit to see if we heard the noise - we did not.
I went to pay bills tonight and figure out how much money we need in the checking account for the coming week - and got stuck as I had not matched slips to credit card statements when they came in earlier this week - husband had to take a test online to renew a professional license and the credit card slips and other papers made too much noise, so I set them aside - and forgot about them until I needed to make sure I had enough in the account to pay one of them.
I also had bill for a party room I had to pay for a club we are in (from the club’s money). The venue mailed the bill to the wrong address. A copy was sent and arrived yesterday - picked late in the day. They had not only the wrong date on the bill, but also the wrong day of the week! I left a voice message last night - they had closed for the day - and left both our house and my cell phone numbers. If they called the house husband knew what to ask and how to deal with the problem. No call back - I called them and they have the right day marked on the calendar for the party - not sure where the wrong one came from. Check went out when I came home after my meeting today.
So in the past month - we almost had a fire resulting in needing a new all in one printer, which did not work with all of my software (and I have not finished installing on this laptop), my eyeglasses had to be replaced, husband broke his upper partial, and the car has a major problem. In addition to the loss of time which needed to be devoted to all of this, we have credit card bills triple what we normally have for a month as a result of all this - and the car still needs to be looked at by the dealer.
Now in addition to all of this - I am working on business tax returns for clients and we are coming up against a deadline for husband to pick Medicare part D and Supplemental Medicare policies. I had done all the research and presented it to him - but he questioned everything and I had to research it all again. Finally he believes me the choices I picked are the best ones and now we have to find the time to register him.
February is over. Hopefully March will be better. The realization that much worse could have happened instead goes far.
I did manage to store all of the rest of the Christmas decorations except the teddy bear village which needs to packed away and since it is all that is left - it is time.
THOUGHT FOR THE WEEK -
How long has it taken for the stuff in your house to get to where it is? Our stuff has piled up in this house for almost 30 years and a lot of stuff came here from 9 years in our apartment, plus what came from decades living at home with our parents.
Stuff that has taken decades to accumulate is not going to be dealt with in a week. One has to be patient and do what one can. Some items we know when we see them should go - whether to the garbage, for donation, back to who we borrowed it from, or even that it is something which someone we know would appreciate much more than us. If we get as much of this “definite to get rid of stuff” as we can - and try not to add any more of it (if Aunt Susie brought a cake on her plat and left it with the cake, hopefully the cake gets finished and the plate washed - make a point of getting the plate back to Aunt Susie - she will have it to reuse and you won’t have it taking up space. Next time transfer it to a paper plate - or one of your plates after it finished being served, wash her plate and give it back to her when she leaves - no matter how much she protests your doing so.
Take a carton (or more than one) - you probably have one around - and fill it with items to donate. Then set a date - soon - to take it for donation or call for someone come and pick it up at your door. I try to gather items and take them for donation when I have my day out after my meeting (the day I missed today).
Toss out what you can - there are items that as much as it seems a waste to toss them out - no one will take them or want them. One cannot even donate TVs which are not flat screen to the Salvation Army. I know around here if we leave some items out when the garbage will be picked up with a note “free, please take” (and sometimes even without the note) people go around during the night and take things. We got rid of a lawn mower that way. It had gas in it. We would have to drain the gas for the garbage department to take it and did not want to deal with same and it would have to start - which it did not - for it to be donated. We left it out with a note attached and by the next morning it was gone.
Whatever you get out of the house leaves that much less to deal with - especially if you don’t add to what you have. Don’t be upset that it does not all instantly disappear. A little at a time is a step forward. After we had the bedbugs I had to put away 3 dressers worth of fabric pieces which had been removed, heated and bagged (which in itself was a project done 2 bags a night until over 60 bags were done - this included our household fabric items also - clothes, towels, bed linens, etc). This was an overwhelming daunting task. I finally decided that I would put away 10 pieces of fabric a night. I was also making a small swatch card for each piece of fabric - something I always wanted to do and while I had to put the fabric away it seemed a good time. My husband said to me that 10 pieces was nothing - but I pointed out - it would be 10 pieces more put away than was put away before. Some nights I felt like dealing with more than 10 pieces, some nights circumstances did not allow me to do 10 pieces and some nights I could do no pieces out all. Within a month and half the fabric was all away and I had the fabric swatch book I always wanted. By doing it in small amounts it was not tedious and I was able to keep at it.
So, if you can’t deal with the big problem - deal with a small part of it and then do so again.
Showing posts with label contributions. Show all posts
Showing posts with label contributions. Show all posts
Thursday, March 2, 2017
Thursday, October 13, 2016
A New Year?
Today was Yom Kippur - this is the holiest day of the Jewish calender. 10 days ago this holiday period started with Rosh Hashanah - which means “head of the year” and is generally referred to as “Jewish New Year”.
Okay, so I am vamping a bit as I don’t have anything written. Monday was Columbus Day, We went to the eye doctor last week on Friday and husband’s niece’s birthday party on Sunday so I have had a busy week.
Last night I normally would have written my post for this week, but could not as Jewish holidays start the night before the day of the holiday. (There is a biblical reason for this, but I am not teaching bible class here - feel free to post back and ask if you want to know.) We have a huge lists of things we cannot due on Jewish holidays, most of the time I tend to ignore the list and do the things if they arise, but I try to set these two holidays - Rosh Hashanah and Yom Kippur apart from other days due to their significance, so here I am, with no idea of what to write at the last minute (sound familiar to you).
As I mulled this over tonight I thought the significance of this period - the two holidays and the time between them are a period of reflection and its relation to becoming more organized and less cluttered.
Huh? This was the time of year when Jews take the time to think about the past year - what they did wrong, what they would like to change, how they could have improved their life and the lives of others. One is suppose to apologize for wrongs they have done in the past year to those to whom the wrongs have been done - whether spouse, child, boss, employee, friend, foe, the annoying teller at the bank, the sales girl who was too slow, the customer who could not give you their order properly, the neighbor who thinks you play your guitar too loud, your dog - you forgot to walk him, and God. By making these apologies one is clearing up the past and getting ready for the future.
We also think about the coming year - what can we do to make the coming year better for us and those around us. Sort of like regular New Year’s resolutions but not exactly. I will call my mother more often. I will be more generous to charity. (This period is to Jewish charities similar to what Christmas is to general charities, people are more generous and several of the charities have their donation campaigns during this period.) I will try to get my blog posts written ahead of time and have them make more sense. I will try not to annoy my husband with stupid things so often. I won’t lie (as much?). I will actually clean the house when it is on my to do schedule. And so on.
I offer you this holiday period (albeit after it has ended - another thought for next year, offer it when it is about to occur) to help you.
Take the time to apologize to anyone you have wronged. They will probably be surprised and will feel better about you. You will feel better because instead of thinking “I wish I hadn’t told John he shouldn’t eat so much and I wish I can take it back” you will know that you have let the John know you are sorry you said that. Do this even with someone who has passed on if you feel you have wronged them. It will clear your mind and your heart of past errors and let you start over.
Do this with your self also. Apologize to yourself for what you have done to yourself. Don’t be angry with yourself any longer for things left undone or things done incorrectly or things you have done wrong. Let it go - forgive yourself. This will also clear your mind and heart and let you start over.
Set aside time and think about what you would like to do in the coming year. I am talking not only in terms of organizing and decluttering, but in general. Try to sort out your thoughts and ideas. Try to make some sense of them.
I have not made a New Year’s resolution - secular or Jewish New Year - in decades. My last one was not to make resolutions - I have kept it. I do try to get some idea of what I would like to do in the coming year and try to make some plans towards doing same. It is a general plan - I might have some specific ideas, but I never think “I will” or “I must”, I think “I will try to”.
When I was a child I could not understand what the big deal was about the New Year (either one). Every day starts a new year. I could not understand what made one starting point more important than another one. Try letting go of what has happened in the past year and think about the year to come. If today is not good - then tomorrow or next week - because every day is the start of a new year.
Okay, so I am vamping a bit as I don’t have anything written. Monday was Columbus Day, We went to the eye doctor last week on Friday and husband’s niece’s birthday party on Sunday so I have had a busy week.
Last night I normally would have written my post for this week, but could not as Jewish holidays start the night before the day of the holiday. (There is a biblical reason for this, but I am not teaching bible class here - feel free to post back and ask if you want to know.) We have a huge lists of things we cannot due on Jewish holidays, most of the time I tend to ignore the list and do the things if they arise, but I try to set these two holidays - Rosh Hashanah and Yom Kippur apart from other days due to their significance, so here I am, with no idea of what to write at the last minute (sound familiar to you).
As I mulled this over tonight I thought the significance of this period - the two holidays and the time between them are a period of reflection and its relation to becoming more organized and less cluttered.
Huh? This was the time of year when Jews take the time to think about the past year - what they did wrong, what they would like to change, how they could have improved their life and the lives of others. One is suppose to apologize for wrongs they have done in the past year to those to whom the wrongs have been done - whether spouse, child, boss, employee, friend, foe, the annoying teller at the bank, the sales girl who was too slow, the customer who could not give you their order properly, the neighbor who thinks you play your guitar too loud, your dog - you forgot to walk him, and God. By making these apologies one is clearing up the past and getting ready for the future.
We also think about the coming year - what can we do to make the coming year better for us and those around us. Sort of like regular New Year’s resolutions but not exactly. I will call my mother more often. I will be more generous to charity. (This period is to Jewish charities similar to what Christmas is to general charities, people are more generous and several of the charities have their donation campaigns during this period.) I will try to get my blog posts written ahead of time and have them make more sense. I will try not to annoy my husband with stupid things so often. I won’t lie (as much?). I will actually clean the house when it is on my to do schedule. And so on.
I offer you this holiday period (albeit after it has ended - another thought for next year, offer it when it is about to occur) to help you.
Take the time to apologize to anyone you have wronged. They will probably be surprised and will feel better about you. You will feel better because instead of thinking “I wish I hadn’t told John he shouldn’t eat so much and I wish I can take it back” you will know that you have let the John know you are sorry you said that. Do this even with someone who has passed on if you feel you have wronged them. It will clear your mind and your heart of past errors and let you start over.
Do this with your self also. Apologize to yourself for what you have done to yourself. Don’t be angry with yourself any longer for things left undone or things done incorrectly or things you have done wrong. Let it go - forgive yourself. This will also clear your mind and heart and let you start over.
Set aside time and think about what you would like to do in the coming year. I am talking not only in terms of organizing and decluttering, but in general. Try to sort out your thoughts and ideas. Try to make some sense of them.
I have not made a New Year’s resolution - secular or Jewish New Year - in decades. My last one was not to make resolutions - I have kept it. I do try to get some idea of what I would like to do in the coming year and try to make some plans towards doing same. It is a general plan - I might have some specific ideas, but I never think “I will” or “I must”, I think “I will try to”.
When I was a child I could not understand what the big deal was about the New Year (either one). Every day starts a new year. I could not understand what made one starting point more important than another one. Try letting go of what has happened in the past year and think about the year to come. If today is not good - then tomorrow or next week - because every day is the start of a new year.
Thursday, April 7, 2016
TAXES PART 3 MORE DEDUCTIONS - THE FINAL PART
Wow, I thought I might not get a chance to write and post this week. I am in the final leg of doing tax returns for clients (ours waits until the clients returns are finished), preparing for a club meeting today, my husband’s birthday this past Monday and a day trip out of state for his birthday yesterday, Tuesday, I have not had a chance to write the post, something I usually do overnight Tuesday to Wednesday. So here it goes -
The last two posts were about income and the most common types of deductions for personal income taxes and saving the paperwork during the year (and sort of what you should be looking for now if you did not save the paperwork during the year) so that the returns can be easily prepared and filed. Today I am going to talk about some common,but less common deductions which go on the same form - Schedule A. You also know that I will now tell you that you should not rely on this post for income tax advice and you should always check with your tax preparer and that different things apply to different people and different situations.
There are an assortment of situations in which one suffers a financial loss. called a casualty loss. Sometimes one can deduct part of the loss on their taxes if they file Schedule A. If you had a theft loss, a accident, such as car accident, vandalism, fire, or storm damage or a bank in which you have money becoming insolvent - these are some of the losses which can be deducted. You need to fill in another form 4684 and attach it to your return, which will give you the information to fill in Schedule A. So if you had any of these situations, keep any paperwork you have - insurance claims, police or fire reports, etc. (Put them in what? Yes, your envelope.) There are limits on this deduction - you have to subtract $100 for each event and the loss has to be more than 10% as calculated in a certain manner and you have to subtract any insurance payment or other reimbursement from your loss. When you do the paperwork for this type of loss you can take the loss in value of the item(s) as the deduction amount. What does this mean? If your car was hit by someone it is a casualty loss. The loss is not what it cost you to fix the car - it is the difference in value before and after the accident. If the car was worth $20,000 immediately before the accident and immediately after the accident it is worth $10,000 - your loss would be $10,000 - but then you have to subtract what you received from insurance (yours or someone else’s) and/or what the person who hit you (or anyone else) paid you towards the damage to the car. Then you subtract $100 and then you will have to do the 10% of your income (calculated a certain way) calculation. If you have an item stolen - then the value after the casualty is zero (unless it only partially stolen). This is the sort of thing that makes it good to have someone help you with your taxes. I thought I would mention it as not everyone knows about it.
Then there are what are called miscellaneous and certain job expenses. If you have certain expenses related to your job (and you are not self- employed) they can be deducted - maybe. Like medical expenses the expenses in the category have to be more than a certain percentage of your income 2%.
First, job expenses. There are specific job expenses which are allowed - union or other dues required for your job. Uniforms or other special clothes you need to provide for your job. This category can be odd. One reason doctors traditionally wear white coats? The white coats are deductible, a suit jacket is not. Deducible clothing can not be clothing which can be worn for every day purposes. This would also include tools if you are required to provide your own tools for work. Commuting to work - your trip to your normal work place and home again - is not deductible, but if your boss sends you out from work and you pay the cost of getting to the other location - it is deductible. There is a form 2106 (isn’t it great how there is a form for everything?) on which one lists their job related expenses - the instructions will let you know what can be deducted, as does the instructions for Schedule A. Some job related education can be deducted - read the instructions. If your boss reimburses you for expenses it is income to you and you want to deduct the expenses you paid out to decrease this income. You can deduct the job expenses allowed against what your boss reimbursed you for same even if you cannot itemize your deductions using the form 2106. If your expenses are more than the your boss gave you - that’s when it is deducted on your Schedule A. Certain expenses are allowed based on your job.
You can also deduct in this section of Schedule A expenses related to making your investments - publications, a safe deposit box if you keep financial papers in it, if you pay your income tax by credit card and you are charged a fee by your credit card company, what you pay for your income tax preparation or consultation, and other items - again they are listed in the instructions for Schedule A. Did you have to close a CD early and pay a fee for doing so? Yes, it is deductible here.
There is also a listing of items you cannot deduct in the instructions for this section in the instructions. Again - keep all the paperwork and put it into your envelope as you get it.
You may wonder why some deductions are allowed less a percentage. This is an attempt to make the taxes fair (yes, I said fair). Your medical expenses can be deducted, for example to the extent that they are more than 10% of your income? Why? Well in a simplified explanation, our friends at IRS realize two things - first, everyone has normal medical expenses and second, people with higher incomes can afford to pay more for their normal medical expenses than someone who makes less money. At the present time the amount they consider to be what is normal for a family is up to the 10%. But they also realize that older people often have more medical expenses and therefore once one is older, the percentage falls to 7.5% of income. Oh - did I mention that medical expenses include dental expenses?
Similarly the idea is that casualty losses of up to 10% can be absorbed by someone, while larger amounts cannot be as easily absorbed - and again those with higher incomes can deduct less - in terms of dollars - than someone with a lower income.
The same idea applies to the job and “miscellaneous” deductions - 2% is normal for these expenses to be, and over that is what is unusual and can be deducted. In this case there is also an understanding that someone who receives reimbursement for their job expenses might be better off not using Schedule A and itemizing (listing) their deductions, so on form 2106 they can offset their reimbursement and job expenses.
Even the idea of itemized deductions is IRS’s understanding that not everyone is the same. Everyone is allowed a “standard deduction” which is what IRS thinks the average person should have in all of these items. (And there are different standard deduction amounts for single people, married couples, heads of household, and older people.) If you have more you are allowed to list what you actually have in these expenses and deduct the actual expenses you have itemized (listed). Once one’s income is over a certain amount than one is not allowed to deduct as much of their itemized deductions - again, those with higher incomes can better afford the expenses listed and are more limited as to what they can deduct.
See, you didn’t know that IRS could be nice to you, did you?
Taxes are much too hard to explain in simple terms so all of this is a generalized, basic idea to tell you what the average person should be aware to keep paperwork to help with their taxes. An envelope - big manila, labeled and in a specific place is a great start to helping you keep it all together for your taxes. Not mentioned here is an assortment of specific items - such as if you own a house - keep the papers from when you bought it and any major repairs or additions until you sell the house.
The instruction books from IRS are actually a good source of help. If you look at them online in pdf format you can search the instructions to find what you need.
Talk to you next week - on a new topic, but don’t forget to start your envelope for this year if you have not done so yet - make your 2016 taxes easy to file in 2017!
The last two posts were about income and the most common types of deductions for personal income taxes and saving the paperwork during the year (and sort of what you should be looking for now if you did not save the paperwork during the year) so that the returns can be easily prepared and filed. Today I am going to talk about some common,but less common deductions which go on the same form - Schedule A. You also know that I will now tell you that you should not rely on this post for income tax advice and you should always check with your tax preparer and that different things apply to different people and different situations.
There are an assortment of situations in which one suffers a financial loss. called a casualty loss. Sometimes one can deduct part of the loss on their taxes if they file Schedule A. If you had a theft loss, a accident, such as car accident, vandalism, fire, or storm damage or a bank in which you have money becoming insolvent - these are some of the losses which can be deducted. You need to fill in another form 4684 and attach it to your return, which will give you the information to fill in Schedule A. So if you had any of these situations, keep any paperwork you have - insurance claims, police or fire reports, etc. (Put them in what? Yes, your envelope.) There are limits on this deduction - you have to subtract $100 for each event and the loss has to be more than 10% as calculated in a certain manner and you have to subtract any insurance payment or other reimbursement from your loss. When you do the paperwork for this type of loss you can take the loss in value of the item(s) as the deduction amount. What does this mean? If your car was hit by someone it is a casualty loss. The loss is not what it cost you to fix the car - it is the difference in value before and after the accident. If the car was worth $20,000 immediately before the accident and immediately after the accident it is worth $10,000 - your loss would be $10,000 - but then you have to subtract what you received from insurance (yours or someone else’s) and/or what the person who hit you (or anyone else) paid you towards the damage to the car. Then you subtract $100 and then you will have to do the 10% of your income (calculated a certain way) calculation. If you have an item stolen - then the value after the casualty is zero (unless it only partially stolen). This is the sort of thing that makes it good to have someone help you with your taxes. I thought I would mention it as not everyone knows about it.
Then there are what are called miscellaneous and certain job expenses. If you have certain expenses related to your job (and you are not self- employed) they can be deducted - maybe. Like medical expenses the expenses in the category have to be more than a certain percentage of your income 2%.
First, job expenses. There are specific job expenses which are allowed - union or other dues required for your job. Uniforms or other special clothes you need to provide for your job. This category can be odd. One reason doctors traditionally wear white coats? The white coats are deductible, a suit jacket is not. Deducible clothing can not be clothing which can be worn for every day purposes. This would also include tools if you are required to provide your own tools for work. Commuting to work - your trip to your normal work place and home again - is not deductible, but if your boss sends you out from work and you pay the cost of getting to the other location - it is deductible. There is a form 2106 (isn’t it great how there is a form for everything?) on which one lists their job related expenses - the instructions will let you know what can be deducted, as does the instructions for Schedule A. Some job related education can be deducted - read the instructions. If your boss reimburses you for expenses it is income to you and you want to deduct the expenses you paid out to decrease this income. You can deduct the job expenses allowed against what your boss reimbursed you for same even if you cannot itemize your deductions using the form 2106. If your expenses are more than the your boss gave you - that’s when it is deducted on your Schedule A. Certain expenses are allowed based on your job.
You can also deduct in this section of Schedule A expenses related to making your investments - publications, a safe deposit box if you keep financial papers in it, if you pay your income tax by credit card and you are charged a fee by your credit card company, what you pay for your income tax preparation or consultation, and other items - again they are listed in the instructions for Schedule A. Did you have to close a CD early and pay a fee for doing so? Yes, it is deductible here.
There is also a listing of items you cannot deduct in the instructions for this section in the instructions. Again - keep all the paperwork and put it into your envelope as you get it.
You may wonder why some deductions are allowed less a percentage. This is an attempt to make the taxes fair (yes, I said fair). Your medical expenses can be deducted, for example to the extent that they are more than 10% of your income? Why? Well in a simplified explanation, our friends at IRS realize two things - first, everyone has normal medical expenses and second, people with higher incomes can afford to pay more for their normal medical expenses than someone who makes less money. At the present time the amount they consider to be what is normal for a family is up to the 10%. But they also realize that older people often have more medical expenses and therefore once one is older, the percentage falls to 7.5% of income. Oh - did I mention that medical expenses include dental expenses?
Similarly the idea is that casualty losses of up to 10% can be absorbed by someone, while larger amounts cannot be as easily absorbed - and again those with higher incomes can deduct less - in terms of dollars - than someone with a lower income.
The same idea applies to the job and “miscellaneous” deductions - 2% is normal for these expenses to be, and over that is what is unusual and can be deducted. In this case there is also an understanding that someone who receives reimbursement for their job expenses might be better off not using Schedule A and itemizing (listing) their deductions, so on form 2106 they can offset their reimbursement and job expenses.
Even the idea of itemized deductions is IRS’s understanding that not everyone is the same. Everyone is allowed a “standard deduction” which is what IRS thinks the average person should have in all of these items. (And there are different standard deduction amounts for single people, married couples, heads of household, and older people.) If you have more you are allowed to list what you actually have in these expenses and deduct the actual expenses you have itemized (listed). Once one’s income is over a certain amount than one is not allowed to deduct as much of their itemized deductions - again, those with higher incomes can better afford the expenses listed and are more limited as to what they can deduct.
See, you didn’t know that IRS could be nice to you, did you?
Taxes are much too hard to explain in simple terms so all of this is a generalized, basic idea to tell you what the average person should be aware to keep paperwork to help with their taxes. An envelope - big manila, labeled and in a specific place is a great start to helping you keep it all together for your taxes. Not mentioned here is an assortment of specific items - such as if you own a house - keep the papers from when you bought it and any major repairs or additions until you sell the house.
The instruction books from IRS are actually a good source of help. If you look at them online in pdf format you can search the instructions to find what you need.
Talk to you next week - on a new topic, but don’t forget to start your envelope for this year if you have not done so yet - make your 2016 taxes easy to file in 2017!
Thursday, March 31, 2016
GATHERING PAPERS FOR INCOME TAXES - PART 2
Last week I talked about collecting paperwork for your income for your income tax. This week I am going to talk about collecting paperwork for the deductions (subtractions) from your income tax. While most deductions can be only taken if you itemize (list on Schedule A) your deductions, some can be taken even if you do not. I would also like to explain “deductions” and “credits”. A deduction will decrease your taxable income. A credit will directly decrease the amount of tax you owe.
Paperwork for deductions is harder to collect and organize than that for income because while most of the income papers come to you at the end of the year, the paperwork for deductions is ongoing through out the year. Remember the envelope I suggested you set up? Proof of your deductions should also go into the envelope - if you start the envelope for the year in January you can add in the papers as you go through the year. Even if you were not able to itemize your expenses last year drop the related paperwork in the envelope - you never know.
Again, nothing in this blog is intended to be income tax advice and you should always consult your tax advisor/preparer for what deductions you can take and what documentation you need.
The first type of deduction is medical. This includes medical insurance, doctors, dentists, laboratory fees, prescriptions (generally not over the counter medications), hospitals & other procedures, eyeglasses, hearing aids, dentures, braces (tooth and otherwise) etc. You may have canceled checks, credit card slips, receipts for payments, statements from your medical insurance, etc. Drop them into the envelope as you get them. Get a color ink pen and whenever you pay anything which can be taken as a deduction on your taxes put a mark in your checkbook and/or next to the listing on your bank statement so you can easily find the amounts you spent which are tax deductible at the end of the year. Keep track of your mileage for medical trips or keep receipts from public transportation as you can deduct the cost of the trips. There is a mileage rate set every year by IRS, lower than that for business, specifically for medical trips, so if you know how many miles you traveled during the year for same, you can deduct for same. Medical expenses for “you” includes those for your spouse and anyone from your household you who you claim as a dependant (list) on your tax return.
The next type of deduction is taxes. If you pay state/local income taxes, real estate taxes, depending on your state - personal property taxes, car personal property taxes (different from car registration) and other similar taxes they are deductible. If you buy a large item during the year (such as a car) you want a record of the sales tax you paid on it. Again, copies of checks (or marked items on statements and/or in checkbook), paid bills, etc. should be kept. If your locality allows you to request a paid bill - get it (I know that all I have to do to get same is to check a box on the slip I send with the real estate tax payment).
Next is mortgage interest. There are limits and requirements, but most interest on your home (and a second home) mortgage is deductible. You should receive a form 1098 at the beginning of the next year (around when you get your W2 and 1099s) showing the amount of interest you paid during the year. It may also show the real estate taxes and/or home owners’ insurance your mortgage company/bank paid for you. If you have more than one mortgage you should receive a 1098 from each of them (whether you have multiple mortgages on the same house or you sold your house during the year and had mortgages on the new and old house or there is one on each of several houses you own.) The insurance is not deductible, but the form can be used to show proof of the amount of real estate taxes you paid. If you live in a coop you may receive one of these from your coop showing your share of what the coop paid, as well as a second one from your personal loan on your coop. Guess what? Drop the 1098(s) in your envelope.
Charitable contributions? The government wants us to be generous to what we call charities (they call them not for profit, tax exempt organizations). This includes a large variety of organizations from large (such as the American Cancer Society) to medium size, local (your church or other house of worship) to small (a foundation set up for the family of a firefighter who died for example). One thing that they all have in common is that they have registered with IRS and have been declared to be a not for profit, tax exempt organization. IRS has a list online - https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check
If an organization is not on this list you can not deduct contributions to it. This includes the dollar you give the homeless man or woman on the corner. (It is generous of you to do so and I am not telling you not to, but you cannot deduct it.) Again, you need proof of the amount you donated - our old friends the record of the check to them or a credit card record of money donated, etc. These again go into the envelope. Some organizations, such as churches or synagogues or mosques will send you at the end of the year what you have donated during the year - if you are donating cash to your church there is usually an envelope you can put it in with your name or other information so that at the end of the year they can send you a letter with how much you have donated during the year including the cash. (What you pay for items you purchase at the bazaar, rummage sale, etc. during the year are not deductible.)
You can donate other than cash. If you donate items to an organization (you know the stuff you are getting rid of while decluttering and organizing your home) - Goodwill, Salvation Army, and St. Vincent dePaul being the more common ones I know - they should provide you with a receipt for your donations. When I do this I make a list of what I am bringing and how many bags, etc. they are in. They will then give a receipt saying, for example, 3 bags, and I will attach my list to the receipt and drop in the envelope (well in my case it is a file, but for you - your envelope). The organizations are not allowed to provide a value to you for the items donated. When you are doing your taxes or when you get a chance - there are websites, including one from the Salvation Army, which will provide you with a range of values for various common items - remember the value is not what you paid for it, but what the item would sell for in a thrift type store.
In certain cases if an item one is donating is expensive there are special rules for deducting the donation, including the need for appraisal. So, as I say, make sure you check with whoever prepares your taxes as to what information and documentation you need.
If you volunteer your time for a listed organization you can deduct your expenses in doing so. You cannot deduct the cost of your time, but if you need to spend money in volunteering the money spent may be deductible. My husband and I are reenactors. Our unit is an educational not for profit, tax exempt organization. We have to provide our own period clothing - the cost of same is deductible. If I am going to demonstrate something to the public and I need equipment or supplies to do so and I pay for them - the cost is deductible. You can deduct the cost of traveling to and from where you volunteer - again there are IRS special set mileage rates for volunteering so keep records of when you volunteer and where so you can take the mileage and get and keep receipts if you use public transportation.
Well, this is running long. I guess there will be a part 3 continuing with some of the other deductions you can take and should save records for.
Paperwork for deductions is harder to collect and organize than that for income because while most of the income papers come to you at the end of the year, the paperwork for deductions is ongoing through out the year. Remember the envelope I suggested you set up? Proof of your deductions should also go into the envelope - if you start the envelope for the year in January you can add in the papers as you go through the year. Even if you were not able to itemize your expenses last year drop the related paperwork in the envelope - you never know.
Again, nothing in this blog is intended to be income tax advice and you should always consult your tax advisor/preparer for what deductions you can take and what documentation you need.
The first type of deduction is medical. This includes medical insurance, doctors, dentists, laboratory fees, prescriptions (generally not over the counter medications), hospitals & other procedures, eyeglasses, hearing aids, dentures, braces (tooth and otherwise) etc. You may have canceled checks, credit card slips, receipts for payments, statements from your medical insurance, etc. Drop them into the envelope as you get them. Get a color ink pen and whenever you pay anything which can be taken as a deduction on your taxes put a mark in your checkbook and/or next to the listing on your bank statement so you can easily find the amounts you spent which are tax deductible at the end of the year. Keep track of your mileage for medical trips or keep receipts from public transportation as you can deduct the cost of the trips. There is a mileage rate set every year by IRS, lower than that for business, specifically for medical trips, so if you know how many miles you traveled during the year for same, you can deduct for same. Medical expenses for “you” includes those for your spouse and anyone from your household you who you claim as a dependant (list) on your tax return.
The next type of deduction is taxes. If you pay state/local income taxes, real estate taxes, depending on your state - personal property taxes, car personal property taxes (different from car registration) and other similar taxes they are deductible. If you buy a large item during the year (such as a car) you want a record of the sales tax you paid on it. Again, copies of checks (or marked items on statements and/or in checkbook), paid bills, etc. should be kept. If your locality allows you to request a paid bill - get it (I know that all I have to do to get same is to check a box on the slip I send with the real estate tax payment).
Next is mortgage interest. There are limits and requirements, but most interest on your home (and a second home) mortgage is deductible. You should receive a form 1098 at the beginning of the next year (around when you get your W2 and 1099s) showing the amount of interest you paid during the year. It may also show the real estate taxes and/or home owners’ insurance your mortgage company/bank paid for you. If you have more than one mortgage you should receive a 1098 from each of them (whether you have multiple mortgages on the same house or you sold your house during the year and had mortgages on the new and old house or there is one on each of several houses you own.) The insurance is not deductible, but the form can be used to show proof of the amount of real estate taxes you paid. If you live in a coop you may receive one of these from your coop showing your share of what the coop paid, as well as a second one from your personal loan on your coop. Guess what? Drop the 1098(s) in your envelope.
Charitable contributions? The government wants us to be generous to what we call charities (they call them not for profit, tax exempt organizations). This includes a large variety of organizations from large (such as the American Cancer Society) to medium size, local (your church or other house of worship) to small (a foundation set up for the family of a firefighter who died for example). One thing that they all have in common is that they have registered with IRS and have been declared to be a not for profit, tax exempt organization. IRS has a list online - https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check
If an organization is not on this list you can not deduct contributions to it. This includes the dollar you give the homeless man or woman on the corner. (It is generous of you to do so and I am not telling you not to, but you cannot deduct it.) Again, you need proof of the amount you donated - our old friends the record of the check to them or a credit card record of money donated, etc. These again go into the envelope. Some organizations, such as churches or synagogues or mosques will send you at the end of the year what you have donated during the year - if you are donating cash to your church there is usually an envelope you can put it in with your name or other information so that at the end of the year they can send you a letter with how much you have donated during the year including the cash. (What you pay for items you purchase at the bazaar, rummage sale, etc. during the year are not deductible.)
You can donate other than cash. If you donate items to an organization (you know the stuff you are getting rid of while decluttering and organizing your home) - Goodwill, Salvation Army, and St. Vincent dePaul being the more common ones I know - they should provide you with a receipt for your donations. When I do this I make a list of what I am bringing and how many bags, etc. they are in. They will then give a receipt saying, for example, 3 bags, and I will attach my list to the receipt and drop in the envelope (well in my case it is a file, but for you - your envelope). The organizations are not allowed to provide a value to you for the items donated. When you are doing your taxes or when you get a chance - there are websites, including one from the Salvation Army, which will provide you with a range of values for various common items - remember the value is not what you paid for it, but what the item would sell for in a thrift type store.
In certain cases if an item one is donating is expensive there are special rules for deducting the donation, including the need for appraisal. So, as I say, make sure you check with whoever prepares your taxes as to what information and documentation you need.
If you volunteer your time for a listed organization you can deduct your expenses in doing so. You cannot deduct the cost of your time, but if you need to spend money in volunteering the money spent may be deductible. My husband and I are reenactors. Our unit is an educational not for profit, tax exempt organization. We have to provide our own period clothing - the cost of same is deductible. If I am going to demonstrate something to the public and I need equipment or supplies to do so and I pay for them - the cost is deductible. You can deduct the cost of traveling to and from where you volunteer - again there are IRS special set mileage rates for volunteering so keep records of when you volunteer and where so you can take the mileage and get and keep receipts if you use public transportation.
Well, this is running long. I guess there will be a part 3 continuing with some of the other deductions you can take and should save records for.
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