Archive for January, 2007

America Car Donation Tax Deduction

Sunday, January 14th, 2007

You are very philanthropic in nature and you have your old car top be donated. Well, the law is liberal too…

It’s not easy to understand the loopholes or the provisions that you might get in terms of donating your car. The deductions stand at the donors claimed value and the purpose of use of the vehicle. From 2005, the rules have changed a bit. If you put the value of the carat above $5000, and then the organization sells, you can only get the gross profits on the car as the deductions.

Follow these points to keep a track of your maximum deduction available.

1. Eligibility of the organization: The charitable trust must be a qualified one for the contribution to get the tax benefit. A good place to do so is from Publication 78 which is available online and in public libraries. 2. Itemize everything: In order to avail of deductions for your car donation, you need to itemize your deductions. Those who claim standard education can’t benefit from this clause.

3. Fair market value (FMV) is to be estimated: There are various factors that must be considered in order to determine the value of your car. Many used-car buying guides will give you precise instructions so that you can make adjustments to the value of a car for accessories, mileage and other indicators of its general condition.

4. Deduct the FMV: You are only allowed to deduct the fair market value of your car, which accurately takes into consideration the condition of the donated vehicle. You are not allowed to claim the full value of the car, as some people mistakenly believe.

5. File the Charitable Contribution Deduction: When donating your vehicle and claiming tax deduction, record keeping is essential. You must document all the receipts and forms related to the car donation and its fair market value.

Taxpayers who have any doubts about whether a contribution is deductible should call the IRS at 1-800-829-1040, or for TTY/TDD help, call 1-800-829-4059. If you are concerned that contributions are being sought for deceitful purposes, you should immediately contact the appropriate state charity official, who is often located in the state attorney general’s office.

It is always better to know the rules now and then play safe rather than trying to prove our smartness. If you don’t know, better ask your CPA and they will handle the job in a better way.

Do You Qualify For A Home Improvement Tax Deduction?

Friday, January 5th, 2007

You want a bigger better home every time but the expenses are just mounting, hey wait, the government plans to give you some relief in the form of home improvement.

Never cross the line between home improvement and repair. Both are different.

So, what is home improvement? This would include adding a fence, driveway, new room, swimming pool, garage, porch or deck, insulation, new heating/cooling systems, a new roof or landscaping. A capital expense, wherein you would be spending it once in a lifetime.

Now let’s consider home repair. Home repair is decidedly different from home improvement. It is something you do to arrest the decay of your property. You are spending to keep a check on the damage that has been done. A pure damage control

What constitutes home repair? Repainting, any sort of fixing, repairing leaks, and replacing broken fixtures constitute home repairs. But there is also a way to bend the rules, that is show your house as home improvement. So try repairing a few things when you are trying to add a few things to your house.

A drop in home rates should be the ideal time to improve homes, as you get the best of rates at the lowest costs. If you do so, then you can deduct these expenses over the life of the loan and helps in saving a lot.

On the other hand, if you use only a portion of the loan you have taken, then the deduction is proportional. The remainder is deducted over the life of the mortgage. You must also remember that points which are not deducted by the year the loan is paid off are usually cent percent deductible in the payoff year.

So, the next time, you are all ready to add a few things to your house and it could go a long way. A good home is a beautiful home.