One Open House I won’t be attending:

IRS Holds Saturday Open Houses on Feb. 26 and March 26 to Help Taxpayers


The IRS announced today that nearly 100 IRS offices will be open on Saturday, Feb. 26, and Saturday, March 26, to help taxpayers. The location of participating offices is listed on IRS.gov. IRS offices will be open from 9 a.m. to 2 p.m. local time. See IR-2011-19 for more.

David Bradsher, CPA

Don’t overlook these deductions; they’re available even if you don’t itemize

You’re probably familiar with the deduction choice you must make when you file your tax return. You either have enough deductions (such as mortgage interest, charitable contributions, and medical expenses) to itemize, or you take the standard deduction, a set amount that doesn’t require you to list specific deductible items.

What you may not be as familiar with are those deductions that you are allowed to take “above the line”; that is, deductions that you can take in addition to your itemized deductions or the standard deduction.

Here’s a quick rundown of above-the-line deductions you shouldn’t overlook when you prepare your 2010 tax return.

* A deduction of up to $250 for classroom supplies purchased by teachers for use in their classrooms.

* A deduction of up to $5,000 for individual retirement account contributions if you’re under age 50. If you’re 50 or older, you can deduct up to $6,000.

* A deduction of up to $2,500 for interest paid on student loans.

* A deduction of up to $2,000 or $4,000 for college tuition and fees, depending on your income level.

* A deduction for the expenses connected with a job-related move.

* A deduction for 50% of the self-employment tax paid if you are self-employed.

* A deduction for alimony paid. (Note that child support is not deductible.)

* A deduction for contributions to health savings accounts.

Most of these deductions have qualification requirements or income limitations. Don’t overlook above-the-line tax deductions. An added benefit: These deductions decrease your “adjusted gross income,” an important number on your tax return. The lower your adjusted gross income, the more likely you are to qualify for credits and deductions subject to income thresholds. For details or assistance in finding all the deductions you’re entitled to, give us a call.

David Bradsher, CPA

Who qualifies as your dependent? Here’s the tax answer

Who qualifies as your dependent? Here’s the tax answer

Who depends on you? When the people counting on you for support are qualifying children or relatives, you may be eligible for a dependency exemption of $3,650 on your 2010 federal income tax return ($3,700 on 2011 returns).

Not sure who meets the definition? Consider these facts.

* Dependents cannot have dependents. The “dependent taxpayer” test prevents you from claiming a dependent when someone else claims you on their return. Put another way, you can only claim a dependent if you yourself are not one.
 
* The tax code gives a definition of a qualifying child. Generally, a qualifying child must not have filed a joint return. In addition, the child must be younger than you are.

* Divorced or separated parents need a signed release to claim an exemption. If you’re a noncustodial parent who wants to claim a dependency deduction for your child in 2010, you must attach Form 8332 to your federal income tax return. As a general rule, copies of divorce decrees or separation agreements are no longer acceptable.

* Qualifying relatives can include family members who do not live with you. Do you support a parent in a nursing home or another state? You may be able to claim a dependency exemption as long as your loved one’s gross income is less than $3,650 for 2010 ($3,700 for 2011), and you provide more than half the total support.

If other family members pitch in to help but no one individually furnishes more than half of your loved one’s total support, you can still benefit. A “Multiple Support Declaration” (Form 2120) lets you decide who claims the exemption.

Contact us if you need more information.

David Bradsher, CPA

Delayed tax returns can be filed starting February 14

Taxpayers who itemize deductions, claim the educator expense deduction, or claim a deduction for tuition and fees were told by the IRS not to file their 2010 returns until the IRS had reprogrammed its computers to handle these late-2010 changes.

The IRS has just announced the filing start date for these returns: February 14, 2011. On that date, the IRS will begin processing paper and e-filed returns claiming any of these deductions.

David Bradsher, CPA