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Question by E A: Do I need to itemize federal to get a state tax deduction?
I know that to claim deductions on your federal tax return you need to have a list of deductions that add up to more than the standard deduction available to each individual (or couple). Is the same true with a state tax deduction? My state offers a deduction for contributions to a state-run 529 plan. Do I have to itemize my federal (or state?) tax deductions and have a greater deduction than the standard deductions to take advantage of this? Or is it just a deduction from my taxable state income, regardless of itemization?

Best answer:

Answer by Iffy
Yes you must itemize on your federal to itemize on your state.

Know better? Leave your own answer in the comments!

Question by Lacey S: What is the difference between a tax credit and a tax deduction?
I’m graduating high school and I am trying to learn more about taxes. What is the difference between a tax credit and a tax deduction?

Best answer:

Answer by someone
Tax credit is full value. The energy Tax Credit is 1500 thus if your tax obligation is 3000 you deduct the 1500 and owe the IRS 1500
A deduction is a Percentage. So a home mortgage interest Deduction is only worth say 3% thus that 1500 is only 450 deducted from your 3000 tax obligation and you ow the IRS 2550

Add your own answer in the comments!

Long Term Care Insurance Tax Deductions

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Home Page > Finance > Insurance > Long Term Care Insurance Tax Deductions

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Long Term Care Insurance Tax Deductions

By: christine
Posted: Oct 20, 2010

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Long-term care insurance policies offer tax deductions to help individuals as well as business owners purchase affordable coverage and sustain their care. The tax deductible has been pursued by the government to resolve the financial stress on Medicaid and make most of the health care budget.

LTC insurance is treated as medical expense under the Internal Revenue Service’s (IRS) tax code.  However, there are guidelines or considerations in deducting tax on individual, self employed, and employer policies.

Individual

The premiums that are considered as medical expense are called “eligible premium,” as defined in the Internal Revenue Code 213(d). Usually, the tax deductions are based on the insured’s age. Here are the recent tax deductions as of 2010:

40 0r under – the deduction limit is 0

Over 40 but not more than 50 — 0

Over 50 but not more than 60 — ,230

Over 60 but not more than 70 — ,290

Over 70 — ,100

For individual policy, the LTC expenses will be treated as deductible when they exceed 7.5% of the individual’s Adjusted Gross Income (AGI). The amount that is beyond the eligible amount will not be acknowledged as medical expense. The eligible premiums on tax-qualified long-term care insurance can be carried over the individual and his or her spouse or any dependents.

Read more articles
2011 Tax Deductions for Long Term Care Insurance
Features of a Good Long Term Care Insurance Policy
Points to Consider Before Buying a Long Term Care Insurance Policy
What is Long Term Care Insurance and How it Works

Self-Employed

Self employed individuals can freely deduct 100% of out-of-pocket LTC premiums up to the eligible premium amount. Again, the amount that exceeds the Eligible Premiums is not counted as deductible. It is also not important to reach the 7.5 AGI to qualify for this deduction. However, a self-employed individual may not qualify for the deductions when he or she or his/her dependent has engaged in subsidized LTC plan (a plan wherein the employer pays full or half of the LTC premiums)Partnership, LLC and Subchapter S CorporationPartners in partnership, members of an LLC, ad shareholders or employees of Subchapter S Corporations with 2% shares in the company are all taxed as self employed individuals. Anyone who is engaged in the abovementioned business may deduct 100% of the Eligible Premium. It is also not crucial to achieve the 7.5% AGI threshold.If the employee or shareholder buys coverage under his or her name and not under the company’s name, then the individual will not be considered as self-employed and should meet the 7.5 threshold like the individual deductions.

Subchapter C Corporation

When a company purchases tax-qualified policies on behalf of its employees and/or their dependents, the corporation is accredited for 100% deduction as a business expense on the total premiums paid. The deductions do not follow the requirements on the age caps of the eligible premiums. The employer can also select whom it covers.

Moreover, there are two factors that may trigger the premiums to become tax deductible: the officers of the corporation and their length of service. There are tax rulings that the tax deduction should not put so much weight on the stock ownership.  The Ten-Pay or Accelerated Premium plans can give generous tax deductions for the corporations and allows the owner to fully pay the long term care premiums.

 

christine – About the Author:

What is long term care insurance tax deduction? Visit http://www.completelongtermcare.com for more long term care insurance information

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Source: http://www.articlesbase.com/insurance-articles/long-term-care-insurance-tax-deductions-3509129.html

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Article Tags:
long term care insurance tax deduction, ltc, ltci, long term care

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Tax Returns – Business Tax Write Offs
Getting Maximum Allowable Tax Deductions

It’s tax time again and everyone is thinking tax returns and how to get the most allowable tax deductions. You may be an individual or a large or small business, either way paying the least amount of tax is a great step to ensuring ongoing financial stability and success.

You may do your own tax return or employ an accountant, either way you are limited to what are allowable tax deductions. BUT there may be one very smart tax deduction that you have overlooked.

Ask yourself this;

Do you want the get the maximum possible tax deduction?

Do you want to keep as much for yourself as possible?

Do you want to increase profits by reducing costs and fees throughout the year?

Are you looking for any ways to save even more tax?

Have you ever used a standard business letter, document or form?

Have you ever had to use written contracts or agreements?

Have you or your employees ever had to spend too much valuable time on day to day paperwork?

Have you exhausted every allowable tax deduction?

If you answered ‘Yes’ then you have missed a valuable way to get another tax write off.

Most businesses need to deal with vast amounts of paperwork every day, for example; personnel management forms, disciplinary documents, accounts and expense reports, performance evaluations, or complete and current employment contracts. These all take valuable time to find, create and keep track of. Wouldn’t it be great to have all of these and many more on your computer, all readily available at any time and all you have to do is open a file, fill in the blanks and print!

Imagine the money, time and effort you can save EVERY DAY. One folder on your desktop full of hundreds of the most commonly used letters, forms, documents, legal contracts and agreements, all pre done and just ready to be used time after time. It’s just like having a secretary and a FREE lawyer on your computer all the time and the bonus bit… IT’S ALL AN ALLOWABLE TAX DEDUCTION!

Quite simply, you are looking at a way to save hundreds and quite probably thousands of dollars throughout the year and at tax return time.

R P Emery & Associates now provide the complete solution, offering you a range of packs that cater to every business and individuals need. Each one professionally prepared and ready to be used time after time. It’s a guaranteed win/win situation for you and your business. Just take a look at what is on offer and remember each one is an allowable tax deduction!

101 Business Essentials
Covering a wide range of common business issues from sales of goods, affidavits, agency agreements, copyright, leasing, employment, Joint venture contracts, confidentiality, property leasing, agency and distribution, and many more. Great Value!

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The Best Value Legal Suite
The Best Value Package includes 101 Business Essentials Contract Software, the Breakthrough LegalGuide™, The Contract preparation hints and tips book™, 205 Business Letters Software™ plus your choice of any other Software Pack.

So there it is, one more way to get the maximum tax deductions AND save time and money throughout the year. Don’t miss this opportunity!

You can’t go wrong. Get your business packs today before it’s too late.

 

If you are a landlord or property manager, knowing your rental property tax deductions is vital for cutting your taxes to the minimum. Find out how to enjoy lower landlord taxes and boost your profit margins right now.

Rental property tax deductions are basically rental expenses that you are allowed to deduct when calculating your rental property taxes. They are crucial because they will reduce your total amount of property income that is taxable.

To cut down your landlord taxes, you can simply include every possible tax deductions that you are allowed to use. The following are the common and important deductions that a rental property owner can enjoy:

1. The Depreciation Value of Your Rental Property

When you buy a new rental property, you cannot claim the full amount that you paid for it as expenses right away. Instead your property is slowly depreciated over a long period of time.

Depending on the country that you live in, most depreciation periods for residential property range from 20 to 30 years. Home owners are usually not allowed to claim depreciation as tax deductions so you will not be able to apply this deduction to your own home.

2. Insurance Premiums Related to Your Rental Property

Being a landlord means that you will usually have to buy a series of insurance polices such as building insurance, home contents insurance and landlord liability insurance.

You will be able to treat the premiums that you fork out for all your landlord insurance policies as tax deductions. If you employ people to manage your rental property, you will be able to claim the premium for their worker insurance as a rental property tax deduction as well.

3. Interest on the Mortgage Payments for Your Rental Property

Unless you are awfully rich, you would have taken a loan like every other landlord to pay for your rental property. Fortunately the interest charged by your bank or lender is counted as rental property tax deductions as well.

4. Repair Bills for Fixing and Maintaining Your Rental Property

The money that you fork out to maintain your rental property in habitable condition is also tax deductible. This refers to any repairs or maintenance that are conducted to make sure that your rental property meets your local health and safety housing standards.

However you must know that any home improvements that you carry out for the purpose of boosting the values of your rental property cannot be considered as rental property tax deductions.

If you hire a contractor or repairman for repairs, make sure you ask them to give you a receipt with the property costs and type of repair work stated on it.

5. Travelling Costs for Managing Your Rental Property

Any travelling expenses that you rake up for rental activities such as rent collection and property repairs are also tax deductible. You are usually allowed to deduct both your gasoline costs and vehicle’s maintenance bills.

If you own rental properties abroad and you travel overseas for real estate activities, you may even to claim your airplane tickets, hotel stays and travelling fares as rental property tax deductions.

The tax agencies in most countries will monitor your tax claims for overseas travel quite closely so be sure not to abuse the system and keep proper written records of your spending such as receipts and bills.

Teo Zhenjie has been showing landlords how to manage their tenants and rental properties effectively on Propertydo http://www.propertydo.com/ – To learn more important tips on rental property tax deductions, visit his website today for step-by-step real estate guides, free resources and forms.

Wouldn’t it be great if the IRS would do audits to determine whether taxpayers had missed any deductions they were entitled to? Sadly, that’s not likely to happen. Meanwhile, many taxpayers miss important deductions that could save them a substantial amount of money.

Professional tax preparers hear over and over again, “Really? I can deduct that?” On top of that, each year there are changes to the tax laws that most people simply aren’t aware of.

The year 2010 was a big one for tax law changes. Not only were there numerous changes to tax deductions in 2010, but by the end of the year some of the earlier changes were changed again. It can be almost overwhelming for the average person to keep up. But, not doing so can result in too much tax being paid because not all applicable deductions were taken.

Although the tax deduction changes in 2010 are too many to cover here, the following are some of the most important deduction change for 2010 returns.

One of the most significant changes in IRS deductions applies to the First Time Homebuyer Credit. There have been changes from the Homebuyer’s Credit of 2009. The one in 2009 had to be repaid; the 2010 version of this credit does not, provided you’ve lived in the house the requisite amount of time to qualify. The 2010 law also includes a credit for long-time homebuyers, not just first time homebuyers. The IRS does require certain closing documents for taxpayers to claim the credit.

There are many types of professional expenses that taxpayers may be able to deduct. There are many deductions for travel and transportation expenses if you know what to claim. And, military personnel qualify for any number of special deductions.

Many deductions set to expire after 2009 were extended until the end of 2011 so they still apply in 2010. These include changes to the Qualified Tuition Expenses, Teacher Classroom Expenses, IRA Distribution to Charity, and State and Local Sales Tax Deductions. Changes were also made to the Alternative Minimum Tax to prevent middle class taxpayers from paying it.

Moving into 2011, the Standard Mileage Rate for deducting up to four automobiles used for business changed, as did the Moving Rate and Medical Travel. The requirements for keeping records for cell phones have been modified. The American Opportunity Credit was extended and energy credits have changed.

Although it can seem overwhelming to stay abreast of all the tax law changes and deductions, doing so can almost certainly save taxpayers a substantial amount of money each year. Even if you use a professional tax preparer or a software program to prepare your taxes, taxpayers still need to understand which deductions may apply.

Taking time to stay informed can make the difference between getting a smaller refund than you would otherwise be entitled, or paying in far more than you would need to pay if all applicable deductions had been claimed.

Tax deductions, sometimes referred to as tax depreciation, reduce taxable income. Reduce your taxable income is reduced your tax liability and the results to save tax. tax credits reduce the amount of tax payable, without reducing your taxable income. It ‘good to remember the difference between credits and deductions in personal tax planning strategy.

For the optimal amount> Tax deductions is important for years recordings detailed financial information in all. This may seem a disadvantage, but the money saved from tax liability that is a bit ‘extra amount.

I miss legitimate tax deductions often not recorded during the year. For example, a record of all donations to see if the money or material goods. Keep a detailed record of the marketValue of the goods that you carry, and be sure to get receipts.

If you go back and forth to do community work service as an independent contractor, landlord, or must be returned UN-driving as part of your work, keep records of instances of this trip and mileage, as these Travel may classify a mileage deduction for your income tax return.

If you are a homeowner, do not forget, once again deduct the mortgage interest on your income tax.

For most taxpayers,And ‘better itemize deductions instead of standard deduction. The standard deduction is $ 5,700 for individuals, $ 8,350 if you qualify as head of household and $ 11,500 for married couples who file jointly. Some of the prints will want to come back, you’re also in a detailed mortgage rates, the guide rail, donations and medical expenses. There are many more detailed deductions for which you may consider, depending on your personalCircumstances. Before deciding whether to opt for the standard deduction, add up all your potential deductions details. If your deductions exceed the standard deductions are detailed on your own, you return a detailed file.

If some of your income falls into a higher tax bracket, you may consider adding this amount in tax systems like the IRA, to reduce taxable income by.

It ‘important to notethe line tax deductions above standard deduction may be made in the report. Things like an IRA, 401K, health savings accounts, food, student loans and tuition fees qualify above-the-line deductions. For a list of deductions above the line for the Internal Revenue Service Web site at IRS.gov.

http://www.cardonationtaxdeduction.goodarticlesite.com/why-should-you-give-up-these-tax-deductions/

Tax Write Offs for the Self Employed…Discover 101 Ways To Reduce your Taxes Legally…

Unfortunately, we had been students of self-employed tax deductionsstrategies for over 20 years before we learned what I’m about to share with you regarding tax reduction tips.

I was shocked when we first found out that as self employed owners there were more tax loopholes than the limited itemized tax deductions that we had routinely rehearsed and become accustomed to.

My husband and I thought we were savvy entrepreneurs especially when it came down to self employed tax deductions solutions. (He said I knew how to squeeze a dollar to make George holler)

Boy when we found out that we were severely losing out on Thousands of dollars per year from not maximizing self employed tax deductions expenses…well it was just a bitter sweet experience. We weren’t happy campers to say the least. Now don’t get me wrong we weren’t blaming anyone.

It was sort of like the lady on the news that was scammed for millions. Her concern was not that she had been scammed. Her concerned was that she was paying income taxes on money that didn’t exist. She was gravely looking for IRS to bestow a tax reduction… better yet, interest tax deductions for all of the years of over paying.

We implemented every self employed tax deductions suggested by our accountant. We were appalled to discover how considerably more tax deductions we could claim as self employed home business owner.

It was no secret we’ve visited our share of CPA ,CFP and every other kind of C’s and never seem to stumble on the one that really resonated with us or could noticeably reduce our business taxes.

Now you get the opportunity to benefit from the same self employed tax deductions tips that it took us over 20 years to learn… you get to devour in the time it takes to read this article.

Fortunately, you get to learn from your experiences and from ours.

Here are 9 Bullet-Proof Self Employed Tax Deductions:

If you own your own business (even a home business) or if you’re an Independent Contractor, you could save hundreds… even thousands of dollars each year.

Here is an outline of what you will learn:

1.      Learn how to potentially deduct most of your fun such as movies, plays, and season tickets

2.      Learn how to potentially deduct your golf, golf balls, golf clubs and lessons

3.      Learn how to potentially deduct all parties in your home

4.      Learn how to potentially bullet-proof all your entertainment from any IRS or state audit!

5.      Learn how to potentially deduct any vacation anywhere in the world by combining the trip with business.

6.      Discover the secret as to why IRS doesn’t require receipts for under per item!

7.      Find out how to potentially deduct all dry cleaning and laundry and even the cost of clothing itself!

8.      Learn how to potentially bullet proof all travel from even the toughest IRS scrutiny

9.      Discover a little known secret (that is used by the super rich) to potentially deduct the equivalent of your children’s weddings and education including law school and medical school- No kidding!!

Sanford C. Botkin, CPA and Former top IRS Tax Attorney lives in Germantown, MD, a suburb of Washington D. C., just a short distance from the IRS headquarters.

Over the past 15 years, Sandy has helped over 50,000 taxpayers including home business owners save millions in taxes through legal tax reduction.

To find out what fox news has to say about Sandy Botkin check our website.

* Here’s my disclaimer….I’m not a CPA or Tax Attorney this is for educational purposes only

O.K…. I’m back

According to Sanford Botkin, CPA and Former top IRS Tax Attorney.

Owning a home business is one of the most profitable tax deductions a person could have.

As small business/home business owners we have more tax breaks available to us then the average business takes.

Any legitimate home base business owner that’s actively pursuing a profit, even part-time can qualify for substantial tax breaks.(read  Sandy’s facts)

According to the American Taxpayer Union in 1958, the average American paid 18 percent of their gross income in taxes, Federal, State, and Social Security.

Today, the average American spends 41 percent of their gross income in taxes.

Taxes are the largest expense for most people. It exceeds food, clothing, lodging, and transportation combined. The Average American works 5 months supporting the government and 7 months supporting their families. Learn tax deductions methods to help you reduce your support to 2 or 3 months supporting the government and 9-to 10 months supporting your family.

Here’s one of the biggest mistakes home business owners make, which is having the mindset that their tax accountant will take care of them. No doubt about it, most accountants are working as hard as they can trying to keep abreast of the never-ending changing tax laws while maintaining and growing a client base.

That’s why we have to study  and do our homework to realize the maximum tax reduction possible for your business. Thinking your accountant will take care of your taxes is like thinking your doctor will take care of your health regardless to what you eat.

We hope this information helps you the way it did with us.

*Strategy is better than Strength
proverb

 

 

Different countries have different tax laws and have different rate of ‘tax deduction’ and different rules for ‘tax credit’ that reduces total annual tax payable, by the amount of ‘tax credit’ a person is eligible for. Tax deduction in effect reduces your total income whereas tax credit reduces your total tax burden. So we can differentiate between the two in many ways some of which are described below.

1. Tax deduction is done in a number of ways like tax deduction at source by way of deducting tax, prior to payment of salary, payment of winnings from lottery, gambling payment or payment to a contractor for his services etc. So the tax is essentially deducted by payment authority, which is paying you. A case in example is your employer. Tax credit is allowed only by the state through its income tax department as per income tax law of the concerned country.

2. Tax deducted from your income automatically turns into a part of overall tax credit at your hands, which you are eligible to adjust as deduction from the total amount of tax payable in a particular financial year while submitting annual returns.

3. Taxes are deducted at various rates depending on income slabs, payment amount etc whereas tax credits are fixed amounts.

4. All the taxes deducted become tax credit at your hands while all the tax credits are not income deductible. For example if you donate a sizable amount to charity organizations which do not have profit motive, then a percentage of such donation may be claimed as tax credit in tax returns. So is the case with home loan interest, educational loans or expenditures etc.

5. Tax credit received as a consequence of lowering your annual gross total income for donations made, certain interests paid and even certain expenditures made, in effect increases your income by refunding you the amount of tax credit you get from such lowering of gross total income. This is a sort of state benefit you get back through the tax refund system of the state.

6. In most countries self employed professionals, businessmen have to pay advance taxes depending on their projected annual income. Once such advance tax is deposited with the treasury, the amount automatically becomes a tax credit at the hands of the individual making such payment.

7. Whereas tax deduction is not refundable, tax credit may become refundable. For example a bank deducts tax on interest payment made to an individual on his deposits and hands him over the tax credit certificate. If the individual does not have taxable income or his total tax payable is less than the tax credit, then he gets full or a part of the tax credit as refund, in effect increasing his total income.

How much income tax you have to pay is determined by your income. To pay the least amount of taxes, you want to take applicable tax deductions to reduce your taxable income and tax credits to reduce your tax bill.

Tax Credits

Tax credits are typically given for educational purposes, low income or having dependents. The amount of the credit is deducted from your tax liability and produces a significantly higher bottom-line reduction than a deduction.

Tax Deductions

Tax deductions reduce your taxable income, which is the amount the government uses to determine how much tax you should pay. Some deductions can be taken only if you itemize.

Qualifying for tax credits and deductions

It is important to note that not everyone qualifies for certain tax deductions and credits. If you make more than a certain amount of money, some credits and deductions, such as for savings accounts, Earned Income Credit and other tax lowering credits and deductions, are not available to you. There are worksheets available to help you determine whether or not you can take a certain tax credit or tax deduction.

Refundable VS Non-refundable Credits

Refundable credits are credits that can be taken in full, even if they exceed the amount that you owe the government. The Earned Income Credit is one example. Non-refundable credits are credits that cannot reduce your tax liability beyond zero. If a non-refundable credit is more than what you owe in taxes, you can only take up to the amount owed.

Common Deductions

Some common deductions that you can take without having to itemize are deductions for retirement contributions, student loan interest, capitol losses and business expenses.

Common Tax Credits

The Child Tax Credit, Adoption Credit, Child and Dependent Care Credit, First-Time Homebuyer Credit and The Hope or Lifetime Learning credit are common tax credits, foreign income credit etc.

Conclusion

1) Tax deduction is that part of taxes which are already paid as tax deducted at source or deposited as advance tax. Tax credit is the tax already deposited with the state treasury plus state benefit to its citizen paid back through its tax assessment system.

2) Tax deduction lowers the income; the tax credit lowers the tax burden

3) Taxes are deducted at various rates depending on income slabs, payment amount etc whereas tax credits are fixed amounts

So I entered a bunch of triathlons this season and all range from $60 to $150 for their entry fees. I am wondering if there is a way to get a tax deduction.

Also if I were to start a business how could I expense these fees to my buisness?