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Tag: "Fl Taxes"

How Inflation Will Cut Your Taxes in 2014

[ 0 ] March 12, 2014

Spectrum Financial Solutions, NJ, FL, Inflation will help taxesMost of the time, inflation is one of the most serious financial threats people face, propelling slow but steady price increases that erode the purchasing power of your savings and make it harder to make ends meet.

But when it comes to your taxes, inflation’s bite need not be too painful: The government makes annual adjustments to the tax code to reflect the higher cost of living, which should help you save on your taxes in 2014.

1. Higher Standard Deductions

The standard deduction allows taxpayers to earn income up to a certain amount without paying any taxes — and without going to the trouble of itemizing deductions. For 2014, the figure for single filers will rise by $100 to $6,200, with joint filers getting a $200 increase to $12,400. Those who qualify as heads of household split the difference, with their standard deduction jumping $150 to $9,100. Depending on your filing status and tax bracket, these increases could save you anywhere from $10 to $80 on your 2014 tax return.

2. Higher Personal Exemptions

Most taxpayers get to take a personal exemption for each member of their families, including dependents. The personal exemption amount will climb by $50 to $3,950 in 2014. The increase could boost tax savings anywhere from $5 to $20 per person depending on your tax bracket, although high-income taxpayers begin to have personal exemptions phased out once their income goes above certain levels.

3. Higher Tax Brackets

The boundaries of the various tax brackets get an inflation adjustment in 2014, allowing taxpayers to earn more money while getting taxed at a lower rate.

For instance, single filers will see the upper end of the 10 percent tax bracket rise from $8,925 to $9,075, while the top of the 15 percent tax bracket will rise from $36,250 to $36,900. By taxing more of your income at lower rates, these shifts will produce tax savings of $72.50 for a single filer earning $40,000 in taxable income. Higher-end earners will reap more substantial savings: Joint filers with taxable income of $250,000 will see a drop of more than $400 in their taxes.

4. Higher Earned Income Tax Credits

Millions of working low-income taxpayers are eligible to receive the Earned Income Tax Credit. The maximum credit amount rises $99 in 2014 for joint filers with three or more qualifying children, with an $88 increase for those with two children, $54 for one-child families, and $9 for eligible individuals with no children.

5. Higher Exclusions for Foreign Workers

If you work abroad, you’re entitled to exclude money you earn in wages or salaries from your foreign job. The amount of money you’re able to exclude will rise in 2014 by $1,600 to $99,200, producing savings of $160 to $640 depending on your tax bracket. The exclusion is designed to offset the taxes that foreign workers typically pay in the countries in which they work.

6. Higher Exemptions for Alternative Minimum Tax

The Alternative Minimum Tax was originally designed to apply only to the richest taxpayers — its purpose being to prevent the wealthy from gaming the system and paying no taxes at all. But over time, thanks to inflation, the tax gradually started capturing more upper-middle-class taxpayers, especially in states that have high taxes that aren’t deductible for AMT purposes. In 2014, the exemption amount of AMT will rise by $900 to $52,800 for single filers and by $1,300 to $82,100 for joint filers. With AMT rates at 26 percent and 28 percent, those increases can save between $234 and $364 in potential AMT liability.

These are just a sampling of the many ways that cost-of-living inflation adjustments will lower taxes for millions of Americans. For more information, be sure to visit the IRS website and get the comprehensive list of inflation adjustments for 2014.

Content provided by:  http://www.dailyfinance.com/2014/01/02/taxes-inflation-adjustment-2014/

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Can You Use Your Car As A Tax Write Off?

[ 0 ] February 19, 2014

Spectrum Financial Solutions, NJ, TaxesTax time has come and gone. As you travel down the bumpy road of deductions, you might be able to write off some of your car expenses, including a percentage of your insurance premiums:

  • Business use of your car 

If you’re self employed and drive your vehicle for work, or if you have a job and use the car for work-related reasons without reimbursement, you might be able to deduct part of your premium.

  • Determine the percentage of time that you use the vehicle for work and then base your deduction for auto expenses (including insurance premiums, as well as gas, oil, repairs, registration fees, lease payments, depreciation, parking and toll fees) on this percentage. To qualify for these deductions, they’ll need to total more than 2% of your adjusted gross income.

    The alternative is to take the standard business mileage deduction (currently 55.5¢ a mile).

  • Loss, theft, or damage

You may be able to claim a loss deduction if your car is stolen, damaged, or totaled in an accident, provided your policy doesn’t reimburse you for the full loss. You may also be able to write off your insurance deductible as part of a theft or casualty loss. However, you can take the deduction only if an individual loss comes to at least $100 and the total loss for the year tops 10% of gross income.

Be sure to keep all relevant receipts, including expenses and police reports, in case the IRS or insurance company asks for verification.

 

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These 8 Tax Breaks Are About to Expire

[ 0 ] January 29, 2014

Spectrum Financial, NJ, TaxesWhen Congress wants to encourage a certain behavior – fuel conservation, for example – it can approve a tax credit or deduction to make that behavior more attractive. And when times are financially tight, Congress often creates or extends tax breaks.

With the economy improving, Congress is feeling less generous. These eight tax breaks are set to expire, so grab them while you can. Unless Congress acts – it’s happened plenty of times before – these tax breaks will be history after Dec. 31.

1. Beefed-up home energy efficiency

You can get a federal tax credit of up to $500 for the purchase of certain energy-efficient home upgrades and appliances. The Nonbusiness Energy Property Credit allows you a tax credit of 10 percent of the cost of materials, up to $5,000.

Eligible products include certain roofs, energy-efficient exterior windows and doors, and insulation installed at your primary home. You can include installation costs when you buy eligible biomass fuel stoves, water heaters and high-efficiency heating and air conditioning systems.

The credit has limits for some products, like windows ($200), central air conditioners ($300), heat pumps ($300), furnaces ($150) and corn-fueled stoves ($300), says Forbes.

Which products are eligible? Energy Star-qualifying products are a good bet, but they’re not guaranteed to qualify. The IRS’ advice:

Not all energy-efficient improvements qualify, so be sure you have the manufacturer’s credit certification statement. It is usually available on the manufacturer’s website or with the product’s packaging.

You can use up to $500 in credit in your lifetime. EnergyStar.gov tells more about the credits.

States have incentives, too. Find them at the Database of State Incentives for Renewables and Efficiency.

2. Electric vehicles

Tax credits for electric vehicles also are due to sunset at year’s end. All-electric vehicles that qualify for a tax credit of up to $7,500 include: the 2013 Fiat 500e, a 2012–14 Ford Focus EV, the 2014 Chevrolet Spark, the 2011–13 Leaf, 2012–14 RAV4 EV and others.

Also on the way out: a 10 percent tax credit of up to $2,500 for buying a two- or three-wheeled electric vehicle (like electric motorcycles and enclosed three-wheelers) that has batteries with a stored energy capacity of at least 2.5 kilowatt-hours, says EV World.com. Larger, four-wheeled neighborhood electric cars with a battery capacity of at least 4 kwh also qualify.

In the new year, you can still get a tax incentive of up to $7,500, though, for “plug-in” hybrid vehicles like the 2012-2014 Ford Focus Electric, the 2013 Ford Fusion Energi, the 2013 Ford C-MAX Energi, and Toyota’s 2012–14 Prius plug-in hybrids. Here’s the whole list. These credits will gradually “phase out for a given manufacturer once that manufacturer has sold 200,000 qualifying vehicles in the United States,” says the Alliance to Save Energy.

3. Classroom supplies

If you’re a teacher, you might have been taking advantage of the $250 deduction for your unreimbursed purchases of classroom books, computer equipment and supplies. Stock up now because this deduction (here’s the IRS description) is set to expire.

4. Conservation easements

A tax deduction for a tool that has helped preserve greenbelts, farmland and wildlife habitat is on the way out. A conservation easement is a legal agreement between a property owner and a land trust or government. The owner gives up some rights to use the land in exchange for claiming a tax-deductible charitable donation. FindLaw has details.

“For example, you might give up the right to build additional structures, while retaining the right to grow crops,” says the Land Trust Alliance. The restrictions stay with the land if it’s sold. Easements also help families pass undeveloped land to future generations. By removing the property’s development potential, its value is reduced, lowering the potential estate tax, the alliance says.

5. State and local sales tax

You can deduct the state and local sales tax you paid during the year, but only if you itemize, says Forbes.

And you must choose: The IRS guidance says you can deduct either state and local sales tax or state income tax but not both.

A tax roundup by information services company Wolters Kluwer is optimistic that Congress may extend this tax break. But just to be sure, make any big purchases you have in mind before the end of the year if you want to deduct the sales tax.

6. Forgiven mortgage debt

In effect, you’ve earned money when the bank lets you off the hook for a part of your mortgage balance. After the tsunami of foreclosures brought pleas from homeowners, lenders sometimes forgive a portion of a borrower’s mortgage debt in a foreclosure, short sale or mortgage modification. The IRS considered this taxable income until Congress passed the Mortgage Forgiveness Debt Relief Act in 2007. It lets taxpayers exclude from taxes up to $2 million in mortgage debt forgiveness on their principal residence. The IRS explains it.

That break is set to disappear. (Those using the Home Affordable Modification Program’s Principal Reduction Alternative should read this article.)

7. Tax parity for commuters

Workers who drive to work can defer $245 a month of pretax salary in 2013 to help pay for parking. Those costs are excluded from your gross income for tax purposes, says the IRS.

The transit parity tax leveled the playing field, giving the same benefits to commuters who use public transit or van pools. But the tax break for those using public transit will shrink to $130 a month in 2014, while increasing to $250 for drivers who pay for parking. Hang onto your receipts next year anyway, in case Congress extends the break retroactively.

8. Charitable contributions from IRAs

If you’re 70½ or older, you can transfer up to $100,000 out of your individual retirement account to charity. This alternative to using an itemized deduction is about to sunset, too.

Content provided by:  http://www.moneytalksnews.com/2013/12/10/these-8-tax-breaks-are-about-to-expire/#gAwxLKHDMdHGSBSb.99

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