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Crowdfunding for Medical Costs

2015-02-16 by Eva Rosenberg

Crowds geting ready for crowdfunding Today TaxMama® hears from Josh in the TaxQuips Forum with this interesting question, let me re-phrase. “I want to raise money for a family member who is ill, using crowd-funding. What’s the best way to do this with the least tax impact?”


Dear Josh,

That is very kind of you. But the way you describe will hold YOU responsible for the income. You will get no deduction for the ‘donation’ to the family member.

Have this person open up a new bank account specifically to receive these funds. It must be in their own name and Social Security number. You may be co-signer on the account. You may not use the funds for your own benefit. Be very careful about that.

Medical crowdfunding sites specify that the donors will NOT get a deduction for
these donations. They are purely voluntary, as gifts. Your family member will not have to pay taxes on the funds.

Be sure that nothing is promised to the donors – no kinds of rewards or anything for their donations – or this could be turned into ‘sales’. Instead, as incentive, let them know that you, or the individual, will be posting updates and photos about his/her condition, mood, etc. And let them know where to find the updates – FaceBook, a WordPress site,
Blogger, etc. (all of them are free). FaceBook requires a login to use. The others don’t.

This is an interesting way for people to get help. And while the donations are not deductible, it’s a great way to help people you care about.
And remember, you can find answers to all kinds of questions about crowdfunding and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

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W-4 Time

2015-02-02 by Eva Rosenberg

Save your paystubs and update your withholding

Today TaxMama® hears from Bingo1 in the TaxQuips Forum, with this disturbing question. “On the w4 form I believe the amount for line 5 is 2 because my husband is the only one working and I don’t work. I have two kids. Is that correct? My CPA told me I should use 1 on line 5. But I believe that is wrong. Please let me know.”

 

Dear Bingo and Friends,

There are three issues I want to cover today:

1) This IS the time to file new W-4s with your employers to instruct them on what to withhold from your paychecks for 2015.

2) If you are already working with a CPA or Enrolled Agent who has given you guidance on what to enter the Form W-4, why would you doubt them? If you really believe they don’t know what they are talking about – don’t work with them. But if they are competent, why second-guess them?

3) The IRS instructions for the Form W-4 are so confusing that it took a tax pro 25 pages to explain them. Don’t waste your time trying to follow them. The size of your family is meaningless. What matters is the joint income and the allowable deductions or standard deductions, your tax credits and the net tax liability that results. This means, to get the withholding right, you must do a projection of your expected tax liability for the year. Then you can follow a really old TaxMama® strategy with only 5 simple steps (from a 2005 TaxQuip).

And remember, you can find answers to all kinds of questions about withholding and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
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TaxMama's TaxQuips Mortgage Unpaid

2015-01-26 by Eva Rosenberg

ForeclosureToday TaxMama® hears from GADS in the TaxQuips Forum, with this issue that I probably should not make public: “A 2 family house has been rented for the last 5 years. Both units are rented. The owner stopped paying the mortgage 18 months ago. He still is collecting rents and reporting them on Schedule E. Since he has not paid any property taxes or mortgage interest those items cannot be deducted. The bank is starting foreclosure proceedings. T Add Mediahe question is: Can he still take depreciation?”

 

Dear GADS,

What a genius.
Or a jerk.

Yes, he must report all the income.
He may only claim expenses that he has actually paid.
Yes, he may claim the depreciation.

And…when the bank forecloses and reports the balance of the debt that has been cancelled, they will include the amount of the accrued interest in that balance.

So when you report the cancellation of debt, you will also get to deduct the interest that they have not paid, and probably also the property tax that the bank paid to protect their interest in the property – and added to the balance of the loan.

See…pure genius.

And remember, you can find answers to all kinds of questions about fiscal irresponsibility and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 2MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


Accidentally Late

2014-12-31 by Eva Rosenberg

missed the tax deadline
Today TaxMama® hears from JNaveen in the TaxQuips Forum, with this disturbing problem. “I regularly file my tax through TaxAct. This year I filed on time both federal and state. With lot of issues at home, I forgot to monitor whether they actually submitted or not. Looks like they didn’t submit state tax for whatever reason. I found it only today when I got mail from the MO DOR with amount I owe.”

Dear JNaveen and Friends,

I selected this question because it’s a mistake that’s easy to make. I hear about problems like this all the time. Whenever you file a tax return using an online service or a storefront-type office please follow-up to make sure your tax return is actually filed.

When you have a relationship with your own personal tax professional, you will hear from them if there’s a problem. But when you’re an online filer, or walk in off the street to chain tax outfit, we keep hearing that people do not always receive notice if their efiled return was rejected. (Either you didn’t notice the email, or missed the call from them, thinking it was a solicitation.)

One way to know for sure is, naturally, if you get your refund. But not all of us have refunds.

Seeing that your payment clears is no guarantee that the tax return was received. Payments go to a different address. When you have a balance due, it’s especially critical to make sure your tax return was properly filed. Otherwise, the late payment penalties are pretty high.

To see if a balance due return was filed, log back into your online account a week after you filed. Or drop by your chain store office to get a printout confirming your efile was accepted. It’s YOUR responsibility to make sure your tax return was filed on time. So, please, take care of yourself.

And remember, you can find answers to all kinds of questions about late filings and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


Cash Donations

2014-08-19 by Eva Rosenberg

Cash donations Today TaxMama® hears from GuideForThePoor in the TaxQuips Forum, who has an interesting question. “Suppose your deductions are too low to itemize, but you still want to give money to charity. Can you give the money to a friend who does itemize – and have the friend donate it to charity and get the deduction?”

 

Dear Guide,

Sure, you are welcome to give your friend any amount of gift you like, up to $14,000 per year, without needing to file a gift tax return.

Your friend is welcome to give all, or part of it, or even more to any charity that you two select.

In fact, this is an excellent way to help charities.

I often advise people who are not in a position to itemize to give their money or household goods to someone who can use the deduction. Wise move.

Bill Porter, EA warns that once you make the gift to your friend, you have no control over that money. If they decide not to donate it, there’s nothing you can do – except not partner with that friend again.

Rita Lewis, EA suggests that if you are close to itemizing, you can use the bunching technique – making a larger donation every other year. Good thoughts from both Bill and Rita.

And remember, you can find answers to all kinds of questions about donations and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum .

 

Download the MP3 (0:00min, 2MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The #1 Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments



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