Don’t Forget these Deductions for your Tax Return

Tax Act

Hopefully you aren’t procrastinating so much that it makes a difference, but its important to note that the due date for filing your 2011 United States federal income tax return isn’t the traditional April 15th, rather its April 18, 2012. This is due to the celebration of Emancipation Day (the day that President Lincoln signed the Declaration of Emancipation) a day earlier than normal (since April 16th is a Saturday this year). As you gather together all of your financial information for fiscal year 2011, minimize your tax liability by keeping the following deductions in mind:

Child Care Deduction
One of the most often overlooked tax deduction line items is the child care deduction. This deduction does not require the taxpayer itemizing deductions and can be taken by any taxpayer who works and has minor children or by any couple where both partners work and have minor children. It can also be taken if one member of a couple is handicapped or disabled and cannot care for the children while the other partner works.

The main items to have available to take the child care deduction are:

  1. Provider’s Social Security number [if an individual]
  2. Provider’s Tax identification number [if an organization]
  3. Provider’s legal name, address and phone number
  4. Total amount paid to Provider
  5. If more than one child, a breakdown of the total dollar amount paid per child

Many taxpayers overlook this particular deduction and it can make a big difference in their return, either by diminishing their payment due or often by increasing a taxpayer’s refund exponentially. In some states it can even result in a state tax refund even when nothing was paid in all year.

Business Expenses and Schedule C
Another often overlooked deduction is business expense. Many taxpayers do not realize that they need to file a Schedule C even for a tiny seemingly innocuous home business. One example is Avon ladies or other cosmetics representatives. They have a number of deductions such as product samples, telephone, home office, wardrobe, computer and office supplies and gas and repairs or standard business mileage deduction if they use their car to deliver product. Most women in this small business arena feel that their business is too small for deductions, but they can greatly assist in the family’s overall tax situation and determine whether they pay in April or get a much-needed refund.

Sales Tax & License Fees
If you itemize, one of the most overlooked deductions is your annual automobile license fee. The part of the fee that is based upon the value of the vehicle can be deducted.  Also, if you purchased any big ticket items during the tax year, the sales tax paid on those items could diminish your 2011 taxes as well.

Gambling
Gambling costs are by far the most overlooked item on tax returns. You can bet that it’s a sure thing that casinos will report any winnings to the IRS, but reporting what you spent acquiring that winning jackpot is your sole responsibility. ¬†That’s why, if you’re even a little bit of a gambler, it is always best to save all of your ATM, check cashing or cash bank withdrawal receipts as proof that you had the wherewithal to make those bets that resulted in your winnings. In most cases, the amount of cash outlay over a one year period will be equal to what was won. In any case, you can write off an amount only up to the amount that you won. It would then be a wash, however, and at least you would not have to pay taxes on your winnings.

Charitable Contributions
Many taxpayers remember to deduct their cash contributions to their church and assorted charities, but forget about tangible goods that they may have deducted. Making sure to get a receipt from any charitable organization that you donate clothing, toys, furniture, appliances and other household goods to is always a good idea. In addition, if you have an old car that really isn’t worth very much if you sell it, it could be worth much more as a tax deduction, so be sure to donate it before the end of the tax year.

While it is your responsibility as a citizen of the United States to pay your fair share, it isn’t your duty to pay more than your fair share. Work within the boundaries of the tax code, and remember that the deductions are there for a purpose. If they apply to your circumstance, take full advantage of them!

Crafted by Stacy Nguyen for the firm of Bottar Leone, PLLC. who believe in American principals, like the responsibility of paying taxes and the right to a fair trial. A good Syracuse personal injury lawyer is ready to help you win your case.

Proposed Massachusetts Sales Tax On Internet Transactions

Tax Act

More and more consumers are choosing to make purchases online today. Retailers lure them on line with web sites or even mobile apps for smart phones that compare prices and features on items from diverse sources. One selling point is that such transactions are usually free of state sales tax. In Massachusetts, though, that may not be the case for long.

Even as members of most committees of the legislature leave town for the summer break, the Committee on Revenue quietly sent legislation that would let Massachusetts start collecting sales tax on transactions that take place on the Internet. Supporters say this sort of tax would increase revenues by $335 million every year. The proposal has sparked intense debate on the propriety of the practice as well as the specifics of the legislation. Wal-Mart is a major funding source for groups looking to add similar legislation in other states.

The bill, H 3672, was voted out of committee with an eight to two majority. Its purpose is to permit the state to collect the already established sales tax of 6.25 per cent from vendors who sell by mail otherwise taxable items to anyone in the state by phone or on the Internet without any physical facilities in Massachusetts. Implementing the new law would require enabling legislation from the US Congress. Massachusetts would be the 24th of 50 states to request such laws from Congress. In other states, revenue has not increased as expected as the retailer Amazon has ended ties with affiliates in those states, putting them out of business, and eliminating any taxable body in the state.

Critics paint the proposal as a new tax and a barrier to economic growth. Proponents point out that it merely seeks to collect taxes due but currently not paid. The additional money would supplement revenue streams from income tax and corporate and property taxes. The dollar amounts received from existing taxes is steadily decreasing, and coupled with unpaid taxes the decreasing revenues create a need for a new revenue source. Activists also point out that online tax free sales by Internet retailers are overwhelming brick and mortar retailers in Massachusetts and elsewhere.