Deducting Automobile Expenses on Your Income Tax Return

Here's a good summary about writing off your car and truck expenses as income tax deductions:

Writing off Automobile Expenses 101, by Chris Peden

Don't Overlook the Maryland Homeowners Property Tax Credit !!!

What is the Homeowners' Property Tax Credit Program?

The State of Maryland has developed a program which allows credits against the homeowner's property tax bill if the property taxes exceed a fixed percentage of the person's gross income. In other words, it sets a limit on the amount of property taxes any homeowner must pay based upon his or her income.

This plan has been in existence since 1975 when it was known as the "circuit breaker" plan for elderly homeowners. The plan was called circuit breaker because it shut off the property tax bill at a certain point just like an electric circuit breaker shuts off the current when the circuit becomes overloaded. The Maryland General Assembly has improved the plan through the years so that now this program is available to all homeowners regardless of their age, and the credits are given where needed based upon the person's income.

How Is "Income" Defined?

For purposes of the tax credit program, it is emphasized that applicants must report total income, which means the combined gross income before any deductions are taken. Income information must be reported for the homeowner and spouse and all other occupants of the household unless they are dependents or they are paying rent or room and board. Income from all sources must be reported whether or not the monies received are included as income for Federal and State income tax purposes. Nontaxable retirement benefits such as Social Security and Railroad Retirement must be reported as income for the tax credit program. Generally, eligibility for the tax credit will be based upon all monies received in the applicant's household in a given year.

What Are The Other Requirements?

Before your eligibility according to income can be considered, you must meet four basic requirements

• You must own or have a legal interest in the property.
• The dwelling on which you are seeking the tax credit must be your principal residence where you live at least six months of the year, including July 1, unless you are a recent home purchaser or unless you are unable to do so because of your health or need of special care.
• Your net worth, not including the value of the property on which you are seeking the credit or any qualified retirement savings or Individual Retirement Accounts, must be less than $200,000.
• Your combined gross household income cannot exceed $60,000.

How Is The Credit Figured?

The tax credit is based upon the amount by which the property taxes exceed a percentage of your income according to the following formula: 0% of the first $8,000 of the combined household income; 4% of the next $4,000 of income; 6.5% of the next $4,000 of income; and 9% of all income above $16,000.

Using the new higher benefit formula enacted by the 2006 session of the General Assembly, the chart below is printed in $1,000 increments to show you the specific tax limit for each income level.

Household Income	Tax Limit
$1 - 8,000	$0
9,000	40
10,000	80
11,000	120
12,000	160
13,000	225
14,000	290
15,000	355
16,000	420
17,000	510
18,000	600
19,000	690
20,000	780
21,000	870
22,000	960
23,000	1050
24,000	1140
25,000	1230
26,000	1320
27,000	1410
28,000	1500
29,000	1590
30,000	1,680
and up to a maximum of $60,000	*

* For each additional $1,000 of income above $30,000, you add $90 to $1,680 to find the tax limit. Your combined gross household income cannot exceed $60,000.

Example:If your combined household income is $16,000, you see from the chart that your tax limit is $420. You would be entitled to receive a credit for any taxes above the $420. If your actual property tax bill was $990, you would receive a tax credit in the amount of $570 --- this being the difference between the actual tax bill and the tax limit.

What Other Limitations?

• Only the taxes resulting from the first $300,000 of assessed valuation.
• The credit applies to the ad valorem taxes imposed by the state, county and municipalities, but it does not cover any metropolitan or fixed charges for water and sewer services that may appear on the tax bill.
• If an applicant owns a large tract of land, the credit will be limited to the lot or curtilage on which the dwelling stands and will not include the excess acreage.
• If a portion of your dwelling is used for commercial or business purposes, the credit will be based only upon the taxes for that portion of the dwelling occupied by your own household.
• You may apply for the credit on only the one dwelling which is your principal residence.

How Does One Receive The Credit?

Homeowners who file and qualify by May 1 will receive the credit directly on their tax bill or as a credit certificate issued at the same time the property tax bill is mailed. Persons who file later up until the September 1 deadline will receive any credit due either in the form of a revised tax bill or a tax credit certificate to be used in payment of the bill. Applicants filing after May 1 are advised not to delay payment of the property tax bill until receipt of the credit if they wish to receive the discount for early payment offered in some subdivisions. A refund check will be issued by the local government if the tax bill was paid before the tax credit was granted.

What Happens If One Is Not Eligible?

Whenever homeowners are found not qualified to receive a tax credit, they are informed in writing. The letter gives the reason for denial and what steps to take if further questions remain. The letter also explains how homeowners can appeal the determination of ineligibility to the local Property Tax Assessments Appeals Board.

When and How Do You Apply?

The Homeowners' Tax Credit is not automatically granted and each person must apply and disclose his or her income. You must apply every year by no later than September 1 on a standard application supplied by the Department of Assessments and Taxation. However, it is to your advantage to submit the application by May 1 so that any credit due you can be deducted beforehand from the initial July tax bill.

An application is routinely sent to homeowners who were recipients of a tax credit in the previous year. Applications are available as of February each year at the local assessment offices and at most public libraries, or by calling the Tax Credits Telephone Service at 410-767-4433 (Baltimore Area) or 1-800-944-7403 (Toll Free). You can download the application from our . The filing deadline for the application is September 1st of each year.

Homeowners Tax Credit Application 

       

Email the Taxcredits Division to request an application.

Once completed, applications should be mailed to:     State Department of Assessments & Taxation
      Homeowners' Tax Credit Program
      301 W. Preston Street, Room 900
      Baltimore, Md. 21201-2395

Your Application Is Confidential

Persons filing for the Homeowners' Tax Credit Program are required to submit copies of their prior year's federal income tax returns and to provide the Department with permission to verify the amount of income reported with other State and Federal agencies. The sole purpose for which this information is sought is to determine your eligibility for a tax credit. All income-related information supplied by the homeowner on the application form is held with the strictest confidentiality. It is unlawful for any officer or employee of the State or any political subdivision to divulge any particulars set forth in the application or any tax return filed, except in accordance with judicial or legislative order. This information is available to officers of the State in their official capacity and to taxing officials of any state, territory, or the federal government, as provided by statute.

Prospective Home Buyers

A law enacted by the 2000 session of the General Assembly allows low and moderate income home purchasers to apply in advance for the Homeowners' Tax Credit before acquiring title to the property. The purpose of this program is to help reduce the amount of monies needed at the time of settlement. You must apply at least 30 days before your expected settlement date to receive any credit due at the time of settlement. For more information, please call the Tax Credit Telephone Service and request Form HTC-NP.

Further Information

The information contained in this pamphlet is necessarily brief and general. Its purpose is to make you aware of the availability of the Homeowners' Tax Credit Program for persons of all ages. If you have any further questions not answered here or if you wish to know how certain features of the program apply to your own case, please call the Tax Credits Telephone Service. We are here to be of service to you. Tax Credits Telephone Service 410-767-4433 or 1-800-944-7403 (toll free in Maryland outside the Baltimore metro area).

(The above information is per the Maryland State Department of Assessmenta and Taxation)

In a Nutshell: Who Qualifies for the Earned Income Credit

The IRS Earned Income Tax Credit topic page sums up nicely who qualifies for the Earned Income Credit :

You may qualify for the earned income tax credit (EITC), if you worked last year, but did not earn a lot of money.  EITC is a refundable tax credit meaning you could qualify for a tax refund even if you did not have federal income tax withheld.

To qualify for the credit your adjusted gross income (AGI) must be below a certain amount and you must:

• Have a valid Social Security Number (if you are filing a joint return, your spouse also must have a valid Social Security Number)
• Have earned income from employment or from self-employment
• Have a filing status other than married filing separately
• Be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return
• Not be a qualifying child of another person (if you are filing a joint return, your spouse also cannot be a qualifying child of another person)
• Not have investment income over a certain amount
• Not file Form 2555 (PDF) or Form 2555-EZhttp://www.irs.gov/pub/irs-pdf/f2555ez.pdf (PDF) (related to foreign earned income), and
• Have a qualifying child who meets four tests (the age, relationship, residency and joint return tests) or:
  • be age 25 but under 65 at the end of the year
  • live in the United States for more than half the year, and
  • not qualify as a dependent of another person

If you qualify, the amount of your EITC will depend on your filing status, whether you have children, the number of children you have, and the amount of your wages and income last year.

Income (AGI)  limits are as follows for the 2013 tax year:

• $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children,
• $43,038 ($48,378 for married filing jointly) if you have two qualifying children,
• $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or
• $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child

For more information check out Publication 596, Earned Income Credit (EIC)

Form W-2 Box 14 Codes for Department of the Interior, Department of Education

JC Leahy, MA Accounting

JCLeahy@TaxHelpWhenYouNeedIt.com
Twitter@TaxHelpWhenNeed 

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If you are a Federal civilian employee of the Department of Interior, Department of Education, the codes that may appear in Box 14 of your W-2 are as follows:

JC Leahy, MA Accounting

1                     Non-taxable quarters deductions

2                     Flexible Spending Account – Health Care – Pretax

3                     Flex Fund – Health (Overseas Private Investment Corp. & Presidio Trust employees only)

4                     Transportation fringe benefit

5                     Transportation non-taxed

6                     Pretax benefits such as health, dental, and/or vision

7                     Occupational privilege tax

8                     COLA – employee residing in Puerto Rico and was paid a non-foreign allowance. This cost-of-living allowance (COLA) is not included in taxable wages

Questions concerning your 2013 W-2 should be directed to the Agency’s Payroll Contact or the Customer Support Center at (303)969-7732 or (888)367-1622, option 3 then 1.

Income Tax Relief for Struggling Single Mother Immigrant

JC Leahy, MA Accounting
February 5, 2014

 I'm so happy! I just got IRS to reduce client's tax bill from $393,000 to zero. She is a Mexican immigrant, struggling single mother working at near minimum wage. She cried in my office for half an hour when she found out. I love it when I can help someone like that.

Taxpayers who filled out their own income tax returns last year without professional assistance left a billion dollars behind in unclaimed refunds and overpaid taxes!! Do yourself a BIG favor this year and get it right when dealing with the IRS!!!!! JC Leahy has a Masters Degree in Accounting, 35 years' accounting experience. He has been focusing on income taxes for 23 years. He has a dedicated office in his home in Silver Spring/Colesville, Maryland. In this private and confidential setting, he will spend as much time as needed to "get it right" when filing your income tax returns.  He can also work with clients long-distance.  Unlike certain tax-prep chain operations and franchises, when tax season has ended, if you have any questions or problems throughout the year, JC Leahy will be readily available to help you.

Make an appointment: Phone JC Leahy at 301-537-5365.

Income Tax Medical Deductions for the Handicapped

JC Leahy, MA Accounting

TaxHelpWhenYouNeedIt.com

Twitter@TaxHelpWhenNeed. Tel. 301-537-5365

Starting in 2013, the federal income tax deduction for medical expenses has been reduced.    If you be of a cynical bent, you might maintain that “they” are trying to balance the federal budget on the backs of the sick and handicapped.  The actual fact is that in order to compute your deduction, you must take your total medical expenses and subtract 10 percent of your adjusted gross income.  Before 2013, the subtraction (or “threshold”) percentage was 7.5 percent of adjusted gross income. Thus, medical expense deductions have been reduced significantly.

Many expenses of handicapped individuals are deductible as medical expenses.  As medical expenses, expenses of the handicapped are deductible (1) only in the year they are paid, and (2) only if they are paid for the diagnosis, cure, mitigation, treatment, or prevention of disease or for treatments affecting any part or function of the body.  Furthermore, medical expenses are, generally, deductible only to the extent that they are paid BY the taxpayer FOR the taxpayer, or his spouse, or his dependent.  The last sentence can be both important and tricky.   For example if you have a wheelchair ramp put on your house and your cousin Charlie pays for it, you can’t deduct it because you didn’t pay for it.  You Cousin Charlie can’t deduct it because it’s not an expense for him, his spouse or his dependent.  In that case NO ONE can deduct the cost of the wheelchair ramp.  One caveat, however:  The definition of the word “dependent” is slightly different from its definition for dependency-exemption purposes.

So, what kind of handicapped expenses can be deducted as medical expenses?  Capital expenses deserve a special mention.  By definition, capital expenses are major outlays that last for years.  Examples are automobiles, houses, computers, furniture, and machines.  The general rule is that capital items cannot be expensed right away when they are acquired.  Instead, their expense must be spread over a specified number of years.  Major handicapped items such as wheelchair ramps or special home modifications are capital outlays but they may – must – be expensed in the year they are paid for.  This is generally a good thing, since you get the medical tax deduction right away.  The same goes for all handicapped capital outlays such as vehicle modification.

Some handicapped capital outlays may increase the value of your home or automobile.  In such an event, the increase in value would have to be subtracted from the medical deduction.  Thankfully, however, the IRS has a list of various capital outlays that are presumed to NOT increase home value.  These include many of the most common items such as wheelchair ramps, stairway modification, kitchen counter and cabinet modification, handrails, and landscape grading to improve access.

In the case of special handicapped automobiles, you may deduct the cost of modifications to your vehicle.  If the handicapped person requires a special design of vehicle, you may deduct the difference in cost between a regular car and the cost of a car designed to hold a wheelchair.

Other handicapped expenses may include home nursing services to care for the handicapped person’s condition, nursing home care if the primary reason for being there is to receive medical care, medical conferences if the conference deals with a chronic disease or condition, and special telephone or electronic equipment,

For more information, you may make an appointment to see JC Leahy (301-537-5365) or see the IRS Publication502 – Medical and DentalExpenses