Ask An Accountant- 8/12

Although tax season is over, tax questions arise year round. Momondealz‘s husband is an experienced accountant and will be answering questions sent to me at cjwtaxpro@gmail.com with the subject line “Ask an Accountant”.

Question: My son is heading to college this year and I was wondering what exactly I can claim on my taxes next year as deductions (i.e. textbooks and other school supplies?

Answer:The following items are eligible for education credits/deduction:

  • Tuition Fees (student activity fees)
  • Course materials (including books, supplies & equipment)
  • Computer (if required as a condition of enrollment)
  • Sports equipment & expenses if they are part of a degree program

These amounts are reduced by scholarships, fellowships, grants, employer-provided assistance, or any other benefit. Depending on the situation (i.e. what year of school the expenses are for combined with filing status and the Adjusted Gross Income of the taxpayer will determine if the items will be treated as a deduction or a credit, and to what extent the credit applies. At AGI above $60k single and $100K married filing jointly, the credit is entirely “phased out”. *Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

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Ask An Accountant- 8/5

Each week Mom On Dealz brings you answers to your biggest accounting questions! Here is this weeks Q&A!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at cjwtaxpro@gmail.com with the subject line “Ask an Accountant”.
Question:
I am in the process of registering the blog as a business and wanted to know if I am going to be able to claim all of the stuff I have already purchased for it from the time I started or if I cannot start claiming until it is registered.
[Read more…]

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Ask An Accountant- Claiming Donations Purchased With Coupons

Each week Mom On Dealz brings us a answer to a accounting question. This week she answers how to claim donations made with items that were purchased using coupons!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at cjwtaxpro@gmail.com with the subject line “Ask an accountant”.
Question:
I donate from my stockpile quite frequently. When claiming these deductions, do I deduct what I paid out of pocket or what the items would normally cost without coupons/sales?
Answer:
There are 2 schools of thinking for this question. One side says you do not get to deduct something you have not paid for (assuming the item is free after coupons). The other side is that you still get to deduct fair market value. Generally speaking, I agree you deduct fair market value. For example, on average, diapers are priced around $10. If you buy a pack of diapers but there is a sale, you have coupons, and you have store rewards (such as register rewards, etc) so your final price is less than $10, you can still deduct $10 since the value of the diapers did not change, despite how much you paid out of pocket.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.
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Ask An Accountant- 7/22


Each week Mom On Dealz brings us a great post, answering accounting questions!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at cjwtaxpro@gmail.com with the subject line “Ask an accountant”.
Question:
In 2010 I won an all expense paid trip as a prize for winning a contest. The company immediately asked for my social security number for the purposes of taxes. I expected I would be responsible for taxes on the value of the trip (I think it was $1,800.00.) In February of this year I contacted the company to see if they were sending me a 1099-Misc so I could file my taxes. They said they were going to send the form by the end of February, but I never received the forms. I needed my tax return funds, so I went ahead and filed my taxes without their information. If they claimed my trip on their taxes for 2010, is it likely that the IRS will see that I didn’t claim the trip and come after me tacking on interest?
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Ask An Accountant – 7/15


Thanks to Momondealz for bringing us this post each week!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at momondeals@yahoo.com
Question:
I have been audited for medical expenses for 2008 (my husband became very ill) and have close to 300 individual expenses. If I copy every bill, check, explanation of benefits from the insurance company, flexible spending account reimbursement, credit card bill, prescription receipt, etc., I will be paying for and sending a 12 x 12 box. Will the IRS take scanned documents on CD or do you have another idea? Also, can I write off the time, postage, printer ink and paper to do this?
Answer:
Typically in an audit, your case should be at a regional level where you have been assigned an agent that should be within driving distance. If that is not the case then I recommend organizing the medical expenses in a 3 ring binder according to how they were listed on the tax return. Have a cover sheet that summarizes each medical expense category like this:
A. Prescrptions $_______
B. Doctors/Dentist $_______
and so on for each one listed on Schedule A. Then provide a stack of copied receipts and verification of payment and reference each page in the bottom right corner for each category A-1, A-2, B-1,B-2 . In an audit situation more is always better and typically if you inundate the agent with a ton of information they are not going to examine every piece of paper. Make it neat and easy to reference where you got the numbers for the tax return and you should be fine. The last thing you want to do is throw a bunch of documents in a box & send it to the agent. This will not work in your favor! Time is never deductible, and there is no deduction for paper, ink, or postage related to tax preparation.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

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Ask An Accountant- 7/1

Thanks Sharon from Momondealz for this great post!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at momondeals@yahoo.com
Question:
What type of accounting software is the best when setting up my small business?
Answer:
The most widespread software for accounting is Quickbooks. I personally recommend the online version. There are several different options for the online version, so what version you need will vary depending on the business and it’s structure. It will allow you to track income, expenses, fixed assets, liabilities, loans, write checks, and payroll is available in some versions.
Right now Amazon has a sale going on with QuickBooks Online Simple Startwhere you can score this program for only $40-a 69% savings. This program is fine but please keep in mind with this version there is no support and accountants will not be able to access it on their own. If you would like the current version with more options and support, you will need to visit Intuit online here where they are offering a free trial.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation

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ASk An Accountant- 6/25


Thanks to Momondealz for bringing us this post each week!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at momondeals@yahoo.com
Question:
If you’re late filing your taxes and the government owes you a refund, are you penalized?
Answer:
You will not be charged if the IRS owes you a refund. They can assess a failure to file, or assess tax based on the information they receive (which is all income from reportable sources & limited deduction info) so the result will be a tax due.
Question:
Are there any tax penalties for selling your 1st personal home if you bought a 2nd personal home before the first one sold? (I’m afraid it’s going to be years before we finally get the first house sold)
Answer:
There is typically no tax on the sale of a primary residence as you are given a $250K exclusion (Single) or $500K exclusion (Married filing Jointly). If the gain (sales price less original cost plus improvements) exceeds the exclusion, then you will pay capital gains tax on the gain. You can own & deduct a primary & a secondary for tax purposes so this should not be an issue if the first does not sell immediately. The only issue I see here is if the original primary was a rental property after you bought the 2nd home. Then there is no exclusion & it is all capital gain.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

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Ask An Accountant- What Expenses Can I Not Claim On My Taxes?


Thanks to Momondealz for this informative post each week!
Although tax season is over, tax questions arise year round. My husband is an experienced accountant and will be answering questions sent to me at momondeals@yahoo.com
Question:
What expenses can you not claim on your taxes?
Answer:
The items not deductible are expenses that would not be used to generate a profit. One example would be groceries. You could not deduct groceries from a shopping trip that you used to post on your website. The groceries are a necessary item needed to sustain life, not make a profit. Commuting mileage cannot be deducted, only the mileage to and from couponing class held outside of your home/office. Personal expenses and profit distributions are not deductble. This question is better answered by including what is deductible…epenses directly related to the generation of profit, that are not necessary living expenses
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

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