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Tax Deductions

Got an IRS Audit Letter? 5 Steps You Should Take Immediately

Got an IRS Audit Letter? 5 Steps You Should Take Immediately

By on Sep 20, 2017 in IRS, IRS Audit, Tax Deductions | 0 comments

If you are the subject of a tax audit and have recently received a letter from the Internal Revenue Service (IRS), you may likely respond like most Americans, with some element of fear and dread.  The fact is, the audit rate is fairly low (around 1%) if you make below $200,000 a year, but for those Americans who are the subject to an audit, the stress can be very high and you may have questions about what immediate steps you should take to respond.  While getting a letter from the IRS is never what you want to find in your mailbox, it does not have to spell disaster. Here are 5 steps to follow if you have received written correspondence from the IRS: Do not panic:  In the vast majority of audits, the IRS has a simple question about an aspect of your tax return. Remember that audits take a lot of resources for the IRS to complete, so it is in their best interest to keep the process and the outcome as simple as possible.  In the majority of cases, information needs to be provided and verified. Once you send in the information (or money), the audit is complete. A correspondence audit is the more common type of audit and can be handled entirely in writing. Verify the audit is real:  The IRS will not call you or email you to inform you of an audit, this information will only come in writing, in the mail. The IRS will also not ask you to provide personal information and will not demand that you pay in a certain way.  Be on the lookout for fraudulent correspondence claiming that they are the IRS. Carefully read, review, and respond to the letter:  Most audits can be resolved fairly easily as noted above, but the key is to respond as directed by the IRS in a timely manner.  Ignoring the request will not make it go away. If you do not understand what is being asked of you, seek the help of a professional tax service or attorney to give you advice about how best to respond. Keep copies: Once you receive any request from the IRS, keep a clear paper trail...

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Homeowner? Find Out What You Can Deduct from Your Taxes

Homeowner? Find Out What You Can Deduct from Your Taxes

By on May 25, 2017 in Consultation, Homeowners, Tax Deductions, Taxes | 0 comments

Typically, many new homeowners aren’t aware of all of their newfound tax deductions and credits. It’s certainly something to take advantage of as owning a new home will require a grand amount of financial responsibility. Here a list of things homeowners can deduct from their next tax filing:  Property Taxes – You should get a statement from your county that states how much you owe in property taxes. However, if you’ve taken out a loan, many banks design home loans so that the homeowner has an escrow account where a percentage of your monthly mortgage is placed in that account to pay for property taxes. At the end of the year, if the amount of taxes stored in escrow exceed the amount owed, then the remaining amount is mailed back to the homeowner. It will only be the amount paid toward property taxes that can be written off on your taxes. Energy Efficient Tax Credit – The money spent on any type of energy efficient appliance can be written off. Depending on the type of appliance, oftentimes only a percentage of the money spent can be written off. Different terms apply. Other than appliances, other energy-efficient equipment such as solar panels, energy-efficient windows, metal roofs, insulation, and the like all apply. Additionally, renewable energy like sun and solar powered wind make you eligible for a tax credit. It’s highly advised to consult a tax professional for the specifics. Ground Rent— There are instances where you may have purchased the dwelling of the home, but not own the property. In such cases, you’d be obligated to pay the owner of the land rent, commonly referred to as ‘ground rent’. If you are in a mortgage or land contract where you’re obligated to pay ground rent for approximately 15 years, you will be able to write that full amount off. It’s very similar to renting a house or apartment and being able to write your monthly rent expenses off. In the case of ground rent, you wouldn’t be able to write off the principle that you paid toward the dwelling. Mortgage Interest – Whatever amount of money you’re paying in interest on your mortgage loan is the amount that you’ll be...

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Get Tax Deductions for Charitable Donations

Get Tax Deductions for Charitable Donations

By on Dec 15, 2016 in Tax Deductions | 0 comments

It may seem like an oxymoron, giving to charitable organizations only to acquire a receipt. The concept of giving has the idea of offering things freely without accepting anything in return, whether it’s cash, clothes, or other possessions. We’re taught to give, give, give and not expect anything back. While that might make you feel all warm and fuzzy inside, there is the matter of considering the Internal Revenue Service (IRS) that also, has arguably made people feel anything other than warm and fuzzy! What’s Waiting for You in 2017 With the holiday season approaching, it’s probably in everyone’s best interest to be reminded that after all of the festivities end, a W2 will be waiting for you to process and send to the IRS. It’s usually at that time, one might begin thinking about all of the things they gave away—things they could have written off as a charitable contribution on their taxes. Forget about the warm and fuzzy feeling. At that particular time, the focus is usually about ‘How can I reduce the amount I owe?’ or ‘How can I increase my refund?’ The answer remains the same: By taking advantage of the tax deductions that are allotted to you. No Reason to Feel Guilty It’s sad to say that many taxpayers don’t take advantage of writing their donations off. Whether it’s because of guilt or they just didn’t bother acquiring a receipt, if they don’t have any documentation to support giving to a charitable organization, then the money is simply gone. Before you settle your conscience to being OK with that, this is what you need to consider: All of those non-profit organizations are required by law to report what they’ve received to the IRS. They’re reporting it, so why shouldn’t you? What Business Qualifies as a Charitable Organization? There might be some people who may not even know what a charitable organization is. A charitable organization is a group that does not work for a profit. Any money or items they receive are dedicated to furthering a cause or social issue. Here are some examples of charitable organizations: Churches Homeless Shelters Pet Shelters Food Banks Other charitable contributions can be seen on television where they’re...

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4 Obscure IRS Tax Deductions You Need to Know About for Next Tax Season

4 Obscure IRS Tax Deductions You Need to Know About for Next Tax Season

By on Sep 25, 2016 in Tax Deductions | 0 comments

Charitable Contributions Many taxpayers might be aware that they can deduct their charitable contributions, but many of them don’t actually take advantage of it fearing that somehow by claiming it on their taxes, they’re really not being very charitable—that they’re cheating somehow. You have to get that sort of thinking out of your head! Non-profit organizations have to account for their income. It’s required by law that these organizations provide all of their donors with a receipt of the amount that they gave. So reporting that receipt to the Internal Revenue Service (IRS) actually helps them out confirming that they legally earned their money. If the IRS feels that any non-profit organization is mishandling their donations, they’ll most likely undergo an audit. So don’t feel bad about reporting to the IRS what you give to charities. You’re helping them out as well as yourself. Student Loan Interest Many times while you’re still in college even, you may get a statement that shows how much interest is accumulating on your student loan. Although you’re not obligated to pay your student loans back until after you graduate, you have the option to start paying your interest while you’re still in school. Of course, this all is contingent on what kind of loan you have too. Now, after you graduate and you have to start paying back your loans, you can deduct the actual amount of tuition you paid for that tax year. Many colleges and universities are obligated to issue a 1098-T Form that states exactly how much tuition you paid that year. This form can make a significant impact on your taxes and make all the difference in whether you’ll owe or pay the IRS. Unfortunately, educational institutions usually take awhile to issue these forms and truthfully, it’s not uncommon to get them after the 31st of January. So, be patient and if you have to. Contact your college to follow up. What you absolutely do not want to happen is receive your 1098-T Form after you’ve submitted your tax filing to the IRS. Jury Duty Income Jury Duty. Who knew? There are some taxpayers who receive wages from their employer if they’re on jury duty. If you’re receiving jury...

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Tax Considerations for First-Time Homebuyers

Tax Considerations for First-Time Homebuyers

By on May 3, 2016 in Tax Deductions | 0 comments

Buying your first home can be an exhilarating and terrifying experience! There’s the excitement of owning your own piece a property, realizing the American Dream, but then there’s all the responsibilities that come with it—things that no one will tell you until you’re approaching or have surpassed the deadline. That’s usually when anxiety sets in.  Here at Success Tax Relief, a tax relief firm in LaPorte, Texas, we have dedicated ourselves to empowering our clients with as much tax information as possible. We don’t want you to be in the dark when it comes to your tax obligations.  As a first-time homeowner, you should also know that not every tax-related case is a burden. Knowing all of the tax responsibilities for homeowners can very well put money in your pocket. We have developed a short list of helpful tax information that will benefit first-time homeowners: Standard Homeowners Tax Credit vs. Itemizing As a new homeowner, you are now eligible to take advantage of the standard homeowners tax credit. The actual amount that you can claim depends on when you bought your new home. However, for general purposes, the tax credit is 10% of the purchase price of your home. This amount can be reduced depending on how you file. The Internal Revenue Service (IRS) states, “full credit is available for homes costing $75,000 or more.” There are more stipulations surrounding this rule, so it is recommended to contact the IRS for more information or consult a seasoned tax expert. Some homeowners may have purchased a fixer-upper. More homeowners are doing this because they find that they can get more equity in their home by purchasing property with a worn-out structure at a low price, then fixing it up; thus, raising the property value and building instant equity. In such cases like this, it’s wise to keep a receipt of all of your home improvement expenses because they might exceed the standard homeowner’s tax credit. Mortgage Interest Tax Deduction The interest that you pay on your mortgage note can be deducted on your annual tax filing. The amount that you can deduct really depends on the date and the amount of the mortgage. In order to claim the full amount...

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Tax Deductible Charitable Donations

Tax Deductible Charitable Donations

By on Dec 22, 2015 in Tax Deductions | 0 comments

The holiday season is officially underway and ‘tis the season to shop, buy, and give gifts to friends and family. It is also the time of the year where people give more thought and attention to the less fortunate. Most of us are familiar with the Santa—or these days, anyone ringing a bell alongside a red Salvation Army bucket, tugging at the hearts of those who are already in the giving mood. You may also see more commercials persuading viewers to give to their charitable organization. For those generous givers, did you know that you could write off some of your financial gifts off as a tax deduction? Well, you can!  Giving in Order to Receive  It may seem odd to expect to profit off of a donation, but it is done all the time. Some organizations will even issue you a receipt for this very reason. Others might take the approach of a for-profit business and issue an official charitable organization statement to you at the end of the tax year to use for tax purposes. What Qualifies as a Charitable Contribution  Just because an organization is asking for money doesn’t mean that they are a non-profit organization. If you are donating finances to a business and expect to write it off as a tax deduction, it is recommended to research that company first to determine if it is for-profit. If so, then it is not legally considered a charitable contribution. Here is a list of the types of organizations that the IRS considers as a tax-deductible contribution:  Public schools Non-profit hospitals Religious Organizations Federal, state and local government businesses and/or anything going toward public purposes Non profit homeless shelters and food banks Veteran’s organizations Goodwill Industries Salvation Army American Red Cross  In short, as long as the organization is non-profit, it is considered a tax write-off. Most of these organizations have arranged it so that you can give online. If this is the method in which you choose to give, then be sure to save your digital receipt. You can even be eco-friendly and create a digital folder on your desktop labeled “Tax Deductible Contributions” and save all of your digital charitable receipts there.  What Does Not...

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