by Fresh Start Tax | Apr 4, 2014 | Tax Help
A Brand New Law Offers Special Tax Option for Philippines Relief Donations; Cash Contributions
Option open Until April 14 Can Be Claimed On 2013 Returns
Taxpayers who make cash contributions on or before April 14, 2014, for Philippines typhoon relief can get an immediate tax benefit by choosing to claim them on their 2013 returns, according to the Internal Revenue Service.
Under special legislation enacted last week, taxpayers can choose to treat cash contributions made on or after March 26, 2014, and before midnight on Monday, April 14, 2014, as if made on Dec. 31, 2013.
This special provision only applies to charitable cash contributions for the relief of victims of Typhoon Haiyan.
It is similar to the accelerated relief provided following the January 2010 earthquake in Haiti.
Eligible contributions
Eligible contributions can be claimed on either a 2013 or 2014 return, but not both. Contributions made after April 14, 2014, but before the end of this year can only be claimed on a 2014 return.
Contributions made by text message, check, credit card or debit card qualify for this special option.
Donations charged to a credit card before midnight on April 14, 2014, are eligible contributions even if the credit card bill isn’t paid until after that date.
Also, donations made by check are eligible if they are mailed by April 14.
Taxpayers can benefit from their donations most quickly by filing their 2013 returns electronically and choosing direct deposit.
Refunds can be directly deposited into a savings, checking or brokerage account, or used to purchase Series I U.S. savings bonds.
The Philippines Charitable Giving Assistance Act, enacted March 25, 2014, does not apply to contributions of property. Gifts made directly to individual victims are not deductible.
To get a tax benefit, individuals must itemize their deductions on Schedule A.
Important note:
Those who claim the standard deduction, including all short-form filers, are not eligible.
Taxpayers should be sure their contributions go to qualified charities.
Most organizations eligible to receive tax-deductible donations are listed in a searchable online database available on IRS.gov under Exempt Organizations Select Check.
Some organizations, such as churches or governments, may be qualified even though they are not listed on IRS.gov.
The IRS reminds donors that contributions to foreign organizations generally are not deductible.
IRS Publication 526, Charitable Contributions, provides information on making contributions to charities.
Federal law requires :
that taxpayers keep a record of any deductible donations they make.
For tax donations by text message, a telephone bill will meet the record keeping requirement if it shows the name of the charity, the date of the contribution and the amount of the contribution.
For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution.
Important note : In addition, for donations of $250 or more, taxpayers must obtain a written acknowledgment by the charity.
Special Tax Option for Philippines Relief Donations, Fresh Start Tax LLC
by Fresh Start Tax | Apr 4, 2014 | Tax Help
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by Fresh Start Tax | Apr 4, 2014 | Tax Help
Are Reverse Mortgages Taxable
Thank God No.
The amounts received from a reverse mortgage are not taxable.
Why ? A reverse mortgage is a loan.
The lender is paying you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home.
With a reverse mortgage, you retain title to your home.
Depending on the plan, your reverse mortgage becomes due with interest when you move, sell your home, reach the end of a pre-selected loan period, or die.
Because reverse mortgages are considered loan advances and not income, the amount you receive is not taxable.
Any interest (including original issue discount) accrued on a reverse mortgage is not deductible until you actually pay it, which is usually when you pay off the loan in full.
Your deduction may be limited because a reverse mortgage loan generally is subject to the limit on Home Equity Debt discussed in Part II of Publication 936, Home Mortgage Interest Deduction.
Are Reverse Mortgages Taxable, Answer Here from Fresh Start Tax LLC
by Fresh Start Tax | Apr 4, 2014 | Tax Help
As e-file Grows, IRS Receives Fewer Tax Returns on Paper, yes, we are saving trees.
As of March 28, the Internal Revenue Service has received 82 million returns through e-file, about 91 percent of returns filed this year.
Only about 9 percent, 8.3 million returns, were filed on paper.
The IRS expects to receive about 148 million individual income tax returns this year and projects that 23 million returns will be on paper, down 7 percent from last year’s total of 25 million paper returns.
IRS e-file has accomplished many goals, including reducing the amount of paper the government must process.
This reduction of paper processing allows the agency to be more efficient and use valuable resources to address other critical work.
The safest way to file
You should know and be reminded that taxpayers that e-file is the safest, fastest and easiest way to submit their individual tax returns. Since 1990, taxpayers have e-filed more than 1 billion Form 1040 series tax returns safely and securely.
E filers are Growing Every Year, The Latest Report from Fresh Start Tax LLC
by Fresh Start Tax | Apr 4, 2014 | Tax Help
Net Investment Income Tax
Starting in 2013, some taxpayers may be subject to the Net Investment Income Tax.
You may owe this tax if you have income from investments and your income for the year is more than certain limits.
Here are things from Fresh Start Tax LLC that you should know about this tax:
1. Net Investment Income Tax.
The law requires a tax of 3.8 percent on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold amount based on your filing status.
2. Net investment income.
This amount generally includes income such as:
- rental and royalty income
This list is not all-inclusive.
Net investment income normally does not include wages and most self-employment income. It does not include unemployment compensation, Social Security benefits or alimony.
Net investment income also does not include any gain on the sale of your main home that you exclude from your income.
After you add up your total investment income, you then subtract your deductions that are properly allocable to this income.
The result is your net investment income. Refer to the instructions for Form 8960, Net Investment Income Tax for more on how to figure your net investment income or MAGI.
3. Income threshold amounts.
You may owe the tax if you have net investment income and your modified adjusted gross income is more than the following amount for your filing status:
- Filing Status Threshold Amount
- Single or Head of household $200,000
- Married filing jointly $250,000
- Married filing separately $125,000
- Qualifying widow(er) with a child $250,000
4. How to report.
If you owe this tax, you must file Form 8960 with your federal tax return.
If you had too little tax withheld or did not pay enough estimated taxes, you may have to pay an estimated tax penalty.
Net Investment Income Tax, What you need to Know, Former IRS Agents – Fresh Start Tax LLC
by Fresh Start Tax | Apr 4, 2014 | Tax Help
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