Car Donation: An Easy Way to Support Your Favorite Charity and Get a Tax Deduction

Most people look forward to getting their tax return, but one of the downsides to filing taxes is that you may find yourself owing the taxman come April 15. What do you do when you realize that you not only owe money, but you owe more than you can pay at the time?

The answer is: charitable deductions.

Did you know that charitable contributions are deductible from your taxes? Most people only think of donations as being cash, and giving away more cash that you don't have won't help you in this case. However, there is another option available - donate your car. Do you have an old car sitting around (even if it doesn't run) that you're not using or are having a hard time selling? If so, you're in luck! Many charities accept car donations, regardless of condition, and this contribution can be deducted from your taxes. There are a few steps you need to take in order to claim a deduction by way of car or other vehicle donation:

First thing you need to do is find out how much value you can get out of the car or other vehicle you plan to donate. Even old cars in poor condition are often accepted for donation, as they can still be sold for parts or scrap. There are sites that specialize in this kind of information, many of them free.

Find a charity or non-profit organization you believe in. It is one thing to donate a car simply for the tax relief, but find a charity that you feel strongly about to donate your car to. You won't only be helping yourself, you will be helping others that you care about.

Thirdly, make your donation - making sure that it is tax deductible. In most cases this will be the full value of the vehicle (actual market value, not Blue Book), but state laws may vary for state income tax purposes. If you have any question about this, you should see your tax advisor.

To prevent over-estimate, the IRS requires people who donate their car to produce a document from the charitable organization specifying the resale price of the car after the car is sold off. Automobiles with retail values up to $500 are exempt from this rule. In any case, make sure you get a receipt detailing your car donation. Requesting a receipt may also be necessary if you have your taxes prepared by a paid preparer.

Donating a car may sound like a big undertaking, but it's not. You can accomplish three things at once - getting rid of an old car that is taking up valuable space, helping your favorite charity, and getting a deduction on your income taxes. If you have an old car and want to reduce your tax payment, donating a car might be right for you!

For more information on car donation, please visit Car Donation For Charity and Tax Relief.

How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share

With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS. Do not count on the IRS to tell you if you have overpaid because they are not required to but you can file an amended return for up to three years.

Chances are, you either prepare your business taxes yourself or have your tax preparer or CPA does them. There a number of issues surrounding either tax preparation method, which can result in your tax liability being calculated as higher than it actually is including missed deductions, numerous changes in tax laws or being given incorrect advice.

As a home-based business professional, there are a number of deductions you are entitled to which many tax preparers often miss. For example, if you run a home office you are entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses.

Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business.

Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.

Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1st and April 15th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct.

This problem does not extend to just tax preparers or CPA's. In the IRS's 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.

The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.

If you have not yet filed your taxes, it is a good idea to get a second opinion from an independent source. The extra money and time spent in doing this could save you thousands. Look for someone or a company who:

· Has sufficient years preparing home-based business tax returns
· Prepares less than the average number of returns between January and April so that your return gets sufficient time and attention.
· Have had clients get a second opinion. In addition, talk to those clients to get there first hand insight.
· Is willing to pay for a second review of your tax returns to ensure accuracy.
· Is willing to take MSN's online Tax IQ Test at http://moneycentral.msn.com/investor/calcs/n_taxq/main.asp. Although designed for consumers, this test contains basic tax information that even junior level tax preparers should know.

Just as you trust a surgeon with your life, you trust this individual or company with your money and confidential information. Be highly selective and do not be afraid to put them through a rigorous qualification. If they are not willing to participate in your qualification then either they do not know their stuff or, your business is not that important to them.

If you already filed your taxes or think you might have missed out on deductions, have been given bad advice or failed to take advantage of a tax law change which could reduce your liability for previous tax years, what can you do? The good news is that by law, the IRS is required, for up to three years, to review your returns and records as many times as needed to find errors. You have the same three years to get a second opinion and file an amended return. In fact, in 2005, 3.3 million taxpayers filed an amended return.

Samuel Rowley, owner of Muffler Masters in Colorado Springs, was able to recover $14,500 through the filing of an amended return when it was found that he overpaid FICA and payroll taxes.

Businesses throughout the U.S. overpay their taxes to the tune of billions each year and your money could be part of the billions that is overpaid. When it comes to your taxes, always get a second opinion to ensure you are not paying more than you should and, you can even hit pay dirt by looking back.

Small Businesses Filing Amended Federal Tax Returns to Recover Money

April 15th may be coming fast. Especially if you, like millions of small businesses, unknowingly overpaid your federal taxes and can recover money by filing an amended return.

According to the IRS tax code, you have three years from the filing date for the tax year in question to file an amended return. For example, if returns for the 2003 tax year were filed on March 1, 2004, the taxpayer has until March 1, 2007 to file an amended return. This same rule also applies if the taxpayer feels they have made errors resulting in a balance.

Most business owners either prepare their business taxes themselves or have a tax preparer or accountant do them. With either method, the tax liability can be calculated as higher than it actually is because of missed deductions, unrecognized changes in tax laws or just plain being given bad advice.

There are a number of applicable deductions which many tax preparers often miss from home office deductions to self-employed health insurance to personal assets converted to business use. Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars.

Another area, which causes many businesses to overpay, is being given incorrect advice by their tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer produces an average of 480 returns between February 1 and April 15, making it difficult for each return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due.

Furthermore, in the IRS's 2004 assessment of their own call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether a business owner does their taxes themselves and had to call the IRS for clarification on an issue or a CPA did, odds are the answer was not correct.

The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can, like all humans do, easily make a mistake.

In 2005 alone, 3.3 million taxpayers filed an amended return. Samuel Rowley, owner of Muffler Masters in Colorado, was able to recover $14,500 through the filing of an amended return when it was found that he overpaid FICA and payroll taxes. Another small business owner, Karen McClafflin, owner of home-based Secret Canyon Realty, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.

Why is it that when faced with a life-threatening surgery a second opinion is immediately sought after but, when trusting thousands or millions of dollars to an individual or entity, it's done without question? Businesses must get a second opinion, whether it is done before or after the return is filed, to ensure they are not overpaying or simply to ensure their returns are accurate in all aspects. If not, they could be leaving thousands of dollars on the table.

Home Business Tax Tips

If you have recently started an Internet or home business, your probably a little intimidated by having to submit a tax return and the possibilities of being audited. Simply follow these guidelines and rest assured that filing your next tax return will go smoothly.

Get yourself an accounting ledger booklet

The first thing that you need to do at the beginning of every year is purchase yourself a accounting ledger booklet. These can be found at your local office supply store and can be found for under $10. You can deduct your millage and the accounting legder also.

Keep a millage tracking sheet in your car

Each year I make myself a simple spreadsheet that I keep in the glove compartment of my car. Each time that I need to get office supplies, or I go to the post office to mail flyers, I write my beginning and ending millage down on the spreadsheet. At the end of the year, I just transfer the millage over to my accounting ledger.

Keep track of your Utilities

If you have a room in your home that is used only for your internet business and nothing else, you will be able to deduct a portion of your utilities. I especially like this because I have to have these things anyway with or without the internet business and now they are tax deductible. Everything from gas, electricity, long distance and garbage pick-up are allowable deductions. Be sure that you keep your payment receipts in your accounting ledger.

Other Business Expenses

You will also be able to deduct any payments to your internet service provider. If you have a website you will be able to deduct your domain name and hosting plan expenses. Other deductable items could be anything you have purchased to maintain your business such as: fax machines, copy machines, scanners, ink cartridges, desks, chairs, phones, pencils, paper, etc.

Advertising / Membership Fees

If you pay for advertising or your internet business has a membership fee, these expenses can be deducted also.

Labor Expenses

Many home business owners pay members of their family to help with the home business. Be sure to keep track of the wages that were paid to employees or family members.

Entertainment Expenses

I don't have too much to deduct in this category, but several times a year I will meet a potential client over dinner. Keep track of your dinner expenses, including tips...this is all deductable also.

Income

In addition to all your deductable expenses, you will also need to keep track of any money that you make with your business.

In closing, simply keep track of all your millage, utilities, office supplies, labor and income in your accounting ledger. Be sure to attach a copy of your receipts. Total up each category at the end of the year and take the entire booklet into your tax preparer.

You will find that having a home business can be hassle free at tax time if you have taken the time to keep track of your expenditures and income.

Best wishes for your future success and prosperity!

How to Maximize Your Home Business Tax Deductions for 2006

Someone once said, 'the best way to calculate your taxes is?Honestly'. For 2006, add 'Smartly' to that and you'll get to keep more than you make. This April 15th is going to be the day of reckoning for every taxpayer. If you are smart enough with your accounting and keep your eyes and ears open, this could be your favorite day of the year. Take full advantage of tax deductions due you and you can come back richer from the IRS office.

As a home business owner who has been keeping track of every dollar spent, you can make a killing on your tax deductions with these smart taxpayer tips.

Jot it all down: keep a track of all your business expenses. Maintaining timely and accurate records is something you'll thank yourself for, this April. You don't necessarily need elaborate documentation to do this. An easy and a very cost effective way would be to keep all your expenses jotted down in a diary. It is a good idea to collect evidence as well (in case the IRS decides to do an audit later) like receipts, bills, and statements for cheque payments etc.

Shop for your taxes: this financial year you will have a choice to either deduct your state income tax or your state sales tax. Do some math and compare the two to see which tax deduction is higher. Major purchases in the last financial year should be crosschecked to see in which category they yield a larger deduction.

Itemize your deductions: Before you decide to settle down for standard deductions ($4,850 for singles and $9700 for married couples filing jointly), fill out Schedule A to see if your itemized deductions are larger than the standard deductions. You might be in for a surprise. Consider itemized deductions in areas like: Home ownership, charitable donations, Medical expenses and miscellaneous deductions. According to the IRS's most recent numbers, those filers who itemized back in 2002 deducted an average of $19,673 from their taxes

Go beyond the usual deductions: This year look beyond the good ol' mortgage interest deduction to save some more. Consider medical and dental expenses, sales tax and personal property tax, education expense, damage cause by disaster or theft and miscellaneous expenses. Miscellaneous would include job search expenses, investment expenses like brokerage fees, safety deposit boxes and subscriptions to investment publications. Also included in miscellaneous is..Believe it or not? expenses of filing your taxes! This is still not over: add depreciation on your computer and cell phones used for business purposes.

Entertainment and meal expenses: no?this doesn't include lunch with friend to swap Christmas part ideas. Establishing the business purpose of a meeting is crucial for deducting expenses on entertaining.

Transport expenses: if you use your own car for getting about on business, you can claim deductions on that too. Take care to religiously note down details like mileage, tolls, parking fees and maintenance costs.

A good way of finding out what more you can use for maximising your deduction is to get tax preparation software.

A word of caution here: keep 'creative deductions' like kid's allowance, silicone implant etc. out of the picture. It is rather difficult to outrun the IRS, as they have three years to decide they want to verify your records and can drop in for a surprise audit.

Maximise your tax deductions in 2006 with these tips and see all the cash flow back in into your business.

Also see:
http://money.cnn.com/2006/03/30/pf/saving/willis_tips
http://www.bankrate.com/brm/search/story-taxes.asp

Organizing Your Taxes

Does this scene sound familiar? It's April 7. You haven't seen the top of your dining room table in two weeks because of the piles of paid bills, receipts, canceled checks, and unidentified cash register receipts covering it. Your head pounds and your stomach churns as the countdown to April 15 begins.

You might hate to pay taxes, think the system is unfair, dislike the forms, and even stage a mini-tax rebellion, but in the end the tax man cometh ? with penalty if you're not careful! The key to your survival is taking an organized approach to this unavoidable task.

There are really two issues here. Number one, of course, is getting the information together for this year's tax return. Number two is developing a strategy, which will eliminate the panic you're feeling now next year ? and now is the easiest time to do that too. Consider these tips:

- If you use a tax advisor, make an appointment to get together well before April 15. For the future, do it before the end of the tax year, and you may be able to save on your tax bill.

- Designate a specific, easily accessible place to keep all the information relevant to your tax return.

- Pay tax-deductible items by check or credit card whenever possible. If you have many tax-deductible items, get a separate credit card for those expenses.

Step 1: Collect all the records you can find: canceled checks, credit card receipts and statements, canceled checks, cash register receipts, calendars, and any articles or other information you may have collected with information about what you can deduct. (Use Post-it? Flags to highlight important information.) If you're not sure, discuss with your accounting the critical information to include with your tax return, including documents to support any wages or other income received as well as mortgage interest paid.

Step 2: Separate all the papers into appropriate categories. Put each one into a separate container ? large envelope, plastic basket or shoebox. Labeling each category with a Post-it? Note will make it easier to adjust your category names if you change your mind as you proceed. Since you will probably need more than one sitting to complete your taxes, these labeled containers make it easier to clear your work area, if necessary, and to find your place when you are ready to continue.

Step 3: Take one category at a time and eliminate (or staple together) any duplicate receipts. If you need to correlate your expenses with your calendar in order to prove tax-deductible expenses, such as in the case of entertainment, put all receipts in chronological order to speed up the process. (Use a different color Post-it? Flag for each deductible category.)

Step 4: Now you are ready to begin entering the information on the tax forms, into your computer program, or to take the information to your accountant. (Many accountants will provide a worksheet of compiling information.)

Once you've finished filing your return, the next consideration is how long to keep the material you've collected. The simple answer is to keep whatever you need to persuade the IRS that everything on your return is accurate, and hang on to the evidence for as long as the IRS has the right to question your return. But I'm sure you wanted a more practical answer!

Ordinarily that's three years from the due date for the return, including extensions, to assess any additional tax. But a return can be audited for six years if the IRS suspects the taxpayer has neglected to report substantial income. If fraud is suspected, there is no time limit.

Make sure to keep tax information separated by year. If you have a minimum amount of back-up material, one file folder may be sufficient. Staple together all information for each itemized deduction. Label it clearly with a Post-it? Note. Otherwise, use separate file folders or envelopes for each category. If you run a business and have a very large amount of material, use one storage box for each year. Make sure to label the outside of the box! Put all boxes together. As you put in this year's box, you can remove the box with information you no longer need to keep. Sorting your back-up materials will be easy to do right after you filed this year's return when the categories are fresh in your mind. If you are audited, it will be easy to provide documents to support your tax return.

In addition, consider these tax tips:
- If you write off the cost of a business car, keep the logbook in which you recorded your trips as well as evidence of the costs you incur.

- If you claim as a dependent someone who is not your child, keep a separate file for the evidence that shows you provide more than half of that person's support.

- Keep information that relates to the purchase of all homes at least six years after the sale of the last house. This includes your title, deed of purchase, and information about your home's purchase price, sales price, capital improvements and repairs.