Archive for the ‘Tax Deductions’ Category
Tax Deductions Subject to the 2% Limit
September 2nd, 2009In general, a taxpayer can itemize their deductions instead of taking the standard deduction and deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). You can claim the amount of expenses that is more than 2% of your adjusted gross income.
How to figure out the tax deduction?
You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 36.
How to apply the 2% deduction limit?
Generally, you apply the 2% limit after you apply any other deduction limit. For example, you apply the 50% (or 80%) limit on business-related meals and entertainment (discussed later under Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging) before you apply the 2% limit.
What expenses are subject to the 2% tax deduction limit?
Deductions subject to the 2% limit are discussed in the following three categories.
- Unreimbursed employee expenses (Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 9).
- Tax preparation fees (Schedule A (Form 1040), line 22 or Schedule A (Form 1040NR), line 10).
- Other expenses (Schedule A (Form 1040), line 23 or Schedule A (Form 1040NR), line 11).
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No Comments »Smart Tax Write-offs
August 31st, 2009
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August 10th, 2009The American Recovery and Reinvestment Act of 2009 and vehicle tax deductions
The American Recovery and Reinvestment Act of 2009 provides a deduction for state and local sales and excise taxes paid on the purchase of new:
- cars,
- light trucks,
- motor homes and
- motorcycles through 2009.
It also provides for the deduction of other taxes or fees paid in states with no sales tax.
Do I have to itemize and file Schedule A to claim this new tax deduction?
No. The deduction is available regardless of whether a taxpayer itemizes deductions on Schedule A.
Are all purchases in 2009 eligible for the new tax deductions?
No. Purchases before February 17, 2009, are not eligible for this special deduction.
How much deduction can I get?
The tax deduction is limited to the tax on up to $49,500 of the purchase price of an eligible motor vehicle.
The deduction is phased out for joint filers with modified adjusted gross income between $250,000 and $260,000 and other taxpayers with modified AGI between $125,000 and $135,000.
Help figuring out tax deductions
Taxpayers who make qualifying new vehicle purchase this year can estimate their deduction with the help of IRS Publication 919, How Do I Adjust My Withholding? Lines 10a to 10k on Worksheet 10 take into account purchases above the $49,500 limit, as well as the income phase-outs.
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August 8th, 2009I was told if that if I donate my car it would be a tax write off. Does that mean I get back the full value of the car when I file taxes? With the Cash for Clunker program, I am wondering if I should donate my car or just go to a dealership and get a new car under the cash for clunker program.
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August 3rd, 2009
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