One lesson many politicians have yet to learn is raising taxes generally slows down the economy. As the economy slows, fewer tax dollars are paid to the government. The reverse is often true. Lowering the tax rate stimulates the economy and because more people are working and those already with jobs have increased opportunities, more money flows toward the government.
Your home office can be a good place to start. Put together a map that outlines your work space in your home including the restroom. You can not deduct your entire home but just the part you work in. Things like a portion of mortgage, utilities, home insurance, property tax and maintenance done that year can all be a self employment tax deduction based on how much of a percent of your home is for work.
The state sales tax deduction has been extended. For the last few years, taxpayers have been allowed to deduct the sales tax charged by their state instead of state income tax. While state income tax is almost always more than sales tax, there is a notable exception. Certain states such as Washington, Texas and Florida do not collect income tax. For residents of such states, the sales tax deduction is a huge windfall.
Before you begin planning your party, make sure you know the rules in your town about organizing fundraisers. Also make sure that you know the rules about gambling, as this is outlawed in some areas. You might also need to check with the particular charity to be sure that they approve of this type of fundraising. Unfortunately, many religious, old fashioned, or very family oriented charities will not. You can save yourself a lot of unnecessary time and hassle if you check with the charity and with the local authorities beforehand.
A tax deduction also reduces your gross income for tax purposes. The difference between it and an exemption is the amount of the deduction changes depending upon your circumstances. Let’s consider the business mileage deduction. The deduction is determined by the amount of miles you claim multiplied by a figure issued by the IRS. In 2010, for instance, that figure was 50 cents a mile. The amount of your deduction is entirely dependent upon how many miles you drive. Since it will be different if you drove 1,000 or 10,000 miles, the reduction is known as a deduction versus an exemption.
There are many laws pertaining to car donation. People will no longer receive fair market value, so do not let this catch you off guard. You will only get the amount that the 2000 dodge ram van service or charity was able to get for the car that you donated. Many people do not find this as a problem, since they know they are doing a good deed. Sometimes receiving less money is OK when it is a convenient way to get a problem car off of your hands.
The (general) world perceives charity as something to be pitied. Those who walk around without are to be pitied, and those who have often drop a few coins into a charity box in the hope of walking off with a sticker to place on their shirts – showing all and sundry that they have recently donated something to this worthy cause.
Let’s also say that their mortgage interest is $11,215. If they deduct the entire $11,215 interest from their $100,000 income, their taxable income is $81,670, not $100,000. Note, they deduct the interest off their taxable income, not off their owed taxes. That’s why the savings is not dollar-for-dollar.