Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts

Sunday, 11 October 2015

Tax Benefits of Car Donation

If you donate a car to charity and itemize deductions on your income tax return, it may be possible to claim a deduction for your car donation.

In 2005, the IRS changed the laws related to tax deductibility of car donations because of exaggerated deductions based on inflated book values (book values tend to become less reliable as a vehicle ages). Under the new rules, the deductible amount of your vehicle donation is directly related to the selling price of your vehicle.

Donate a car and if it sells for less than $500 you can take a tax deduction equal to the 'fair market value' of your donation up to $500. Fair Market Value is loosely explained as the "Blue Book" or "Guide Book" value of your vehicle. See our car donation to charity help links below for Kelley Blue Book, NADA Guides or Edmunds.

The charity you donate a car to is required by IRS to send to the donor a contemporaneous written acknowledgement (receipt) within 30 days of the vehicle sale. This receipt must include the following:

The gross selling price of the vehicle (if sold for greater than $500)
Year, Make, Model and VIN Information
A statement that the vehicle was sold at arm's length between two unrelated parties
And a statement that no goods or services were received in return for your contribution.*
*Keep in mind that companies that promise goods or services in return for your car donation are legally cutting into the amount that you can claim for a tax deduction for your charitable contribution.


TIPS TO MAXIMIZE YOUR CAR DONATION TAX DEDUCTION


Car Donation Wizard wants donors to know that donating a car to charity not only helps the organization fund worthwhile research and activities, but you also may be eligible to claim a tax deduction for your charitable contribution. Here are some car donation tax tips:

Make sure the charity is eligible to receive tax deductible contributions. The most common types of qualified organizations are section 501(c)(3) organizations, such as charitable, educational, or religious organizations. Visit IRS.gov to search for registered charities. Car Donation Wizard only works with esteemed, 501(c)(3) non-profit organizations.
Be sure that you get a receipt from the charity for your car donation. You must obtain a written acknowledgment from the charity if the total deduction you are claiming for a donated car is $250 or more. Car Donation Wizard mails a tax receipt for your records following the sale of your vehicle.
The IRS will only allow a deduction for the fair market value of the car. This can be found on the tax receipt mailed to you for your donation.
If the car is worth more than $500, the donor must complete Section A of IRS Form 8283 and attach it to their tax return.
If the car is worth $5,000 or more, an independent appraisal is necessary. The donor must also fill out Section B of IRS Form 8283. Take pictures of the car and save receipts for new tires or other upgrades to verify its value.
Always consult your tax adviser or the IRS for more information about how you can claim charitable deductions. The IRS can answer your tax questions and can provide tax forms, publications, and other reading materials for further assistance. IRS materials are accessible through the Internet at www.irs.gov, through telephone ordering at (800) 829-3676, and at IRS walk-in offices in many areas across the country.

CHARITY CAR DONATION HELP LINKS




Tuesday, 6 October 2015

Tax Information for Students in USA [New]


Get Transcript
You can get a transcript to view your tax account transactions or line-by-line tax return information for a specific tax year.
Filing Your Taxes
Everything you need to file your individual federal income tax return.
Tax Benefit for Education Information Center
Many tax breaks are available to help with the cost of higher education.
Student Aid
This U.S. Department of Education Federal Student Aid website provides information about preparing for education, choosing a school, applying for admission, financial aid and more.
Interactive Tax Assistant (ITA)
The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

Do I need to pay income tax and national insurance?

It’s a common misconception that students don't have to pay income tax in the UK. They do – it's just that their total income usually doesn't take them over their personal allowance (the amount you can earn in a year without having to pay tax). Here’s an overview of how income tax and national insurance affects students, with links to more detailed information.

Income tax is charged on all assessable income in a tax year, which runs from 6 April to 5 April. Everyone resident in the UK has a personal allowance – an amount they can earn before any tax is due. For people under 65 years old it’s £8,105 in 2012/2013 and will be £9,205 in 2012/13.

If you don’t earn more than your personal allowance you don’t have to pay any income tax. Any amount you earn above your allowance is taxed at 20 per cent initially, with much higher incomes eventually taxed at 40 per cent and more. Here’s the government’s summary of income tax rates and allowances.

Interest on your savings may be taxed as well, at 20 per cent initially. However, if you’re on a low income you may be able to avoid this tax. For more information, see tax on savings interest. You can also save or invest your money tax-free with an Individual Savings Account (ISA). See what is an ISA? for more information.

Not all of your income is taxable. Student grants and bursaries, and nearly all scholarships are tax-free. Sometimes private scholarships are taxable, so you should confirm that such payments are tax-free.

Tax is collected either through your employer in a system known as Pay As You Earn (PAYE), or through a self-assessment process if you’re self-employed.

To find out more and check you’re paying the right amount using an online tax checker, see the government’s income tax overview.

Overpaying tax


About 80 per cent of full-time students who work don’t exceed their personal allowance in the year.  However, due to the way tax is calculated, students sometimes overpay tax.

This is because student income often varies considerably during the year. For example, you might work full-time during the summer vacation, and then only part-time or not at all during term.  Therefore, although your overall earnings don’t exceed your personal allowance, or only do so by a small amount, tax may be deducted in the summer on the assumption that your earnings will continue for the full tax year.

If you’ve overpaid tax you can reclaim it, and can do so up to six years after the tax year for which you’re reclaiming.

Reclaiming overpaid tax


If you believe you’ve paid too much income tax you can apply for a refund. You can do this through your local tax office – it’s relatively straightforward. You might need proof of your earnings, such as P60 or P45 forms from your employer.

Some private companies offer to reclaim tax on your behalf, but then take a cut of any refund that’s due – often around 20 per cent. NUS recommends that students or graduates apply for tax refunds themselves, because this is money you’ve earned and is due to you. The process isn’t complicated – here’s the government’s guide to how to claim a tax refund.

National insurance

In addition to income tax, national insurance (NI) may also be deducted from your earnings. NI contributions help to pay for benefits, including the state retirement pension.

If your earnings from paid work are between £146 and £817 per week you pay NI at a rate of 12 per cent of your earnings. If you earn more than £817 per week you pay an extra 2 per cent on top.

As with income tax, students are in no special position with regard to NI, but contributions aren’t deducted from student grants and loans.

For more information on NI, see:

The government’s NI overview
The LITRG’s information on NI.