Holiday Tax Deductions: Gifts to Charity

Posted by Tax Advisor on December 1st, 2015
Last modified: December 1, 2015

It’s almost time to bust out the wrapping paper and tinsel!

Yes, it’s that time of year again. It’s the season of giving. Before you get wrapped up in holiday parties and stocking stuffers, you’ll want to make sure that you’re mind isn’t blurred with visions of sugarplums and too much eggnog.

January marks the start of tax season and we want to make sure that you’re ready. That includes reporting those holiday gifts to charity as tax deductions.

How do I donate?

We tend to think that the only way we can help out in society is by breaking out our checkbooks and tacking on as many zeros as our bank accounts will allow. Money is great. But it’s not the only way. It’s also probably the main reason why the majority of us end up doing nothing. We simply can’t afford to.

Seeing as our daily lives revolve around checking up on ourselves (our bank accounts, our smartphone notifications, our Tinder profiles), it’s easy to forget that taking the time out for others is also considered a charitable donation.

If you can write out a check, then all the more power to you! If you can’t, don’t downgrade the time you can spend helping out at your local soup kitchen or cleaning out your closet to donate those jeans and blazers you never ended up wearing. Your nearest Goodwill or Salvation Army will take them off your hands.

Where should I donate?

The dilemma for some of us is that we don’t know where our hard earned dollars are going when we donate to a charity. We understand! Who wants to spend time researching a reputable charity to support and then not be certain that they are using your money the right way?

Here are a few tools to look into for peace-of-mind’s sake:

  • BBB Wise Giving Alliance Accredited Charities : If you mess with the BBB, chances are slim that you’ll be forgiven…even if they are in the holiday spirit.
  • Charity Navigator : If this is your first time donating, this is a great site to start with. You can choose what type of charity you would like to donate to, generate a list of charities that fit your preferences and then even donate right from the site!
  • or : These will help you choose the best place to volunteer. When you donate your time, it’s easy to see just how much you are helping out.

Save your receipts!

Whether you are donating thousands of dollars or just $1, you must have documentation if you plan on reporting that amount as a tax deduction. Documentation is accredited for tax purposes by the IRS if all of the following are shown:

  • the name of the receiving organization
  • the date of the contribution
  • the amount given

How do I report gifts to charity on my tax return?

The first thing to consider is whether or not you will be itemizing your deductions. If you’ll be claiming the standard deduction instead, then reporting a charitable donation will do you no good; tax-wise anyways.

If you are itemizing your deductions then claiming your donations to charity will need to be done based on the type of donation it is. Let’s take a look:

  1. Donating money. This comes as no surprise to most of us. It’s the easiest way to make a difference (if you have the funds to do it). This method allows you to deduct the amount donated on a Schedule A. If you were given merchandise, tickets, etc… in exchange for your donation, you can only deduct the difference of the two amounts.
  2. Noncash Charitable Contributions. If the contribution is less than $500, you can report the donation on your tax return with appropriate documentation. If the contribution exceeds $500, you must report the donation on IRS Form 8283 and have the appropriate documentation available for the IRS if needed.
  3. Charitable Mileage. You can deduct the costs of any driving you did in service to charity if you’re using your own vehicle. You can either deduct the actual costs for driving (oil and gas prices) or use the standard mileage rate. Multiply that rate by the amount of miles driven. With both methods, you can include the costs of tolls and parking in the deduction amount.

The year is coming to an end. That doesn’t mean you should disregard those donations to charity you make in December. Even if they are gifts, you can still report them as tax deductions on your return this year. Start the new year off right! Let our tax pros here at Rapidtax help you deduct those donations and get your tax return filed on time this coming year!


When Does the 2016 Tax Season Begin For Filing 2015 Tax Returns?

Posted by Tax Advisor on November 13th, 2015
Last modified: November 13, 2015

The 2016 tax season has not started yet but you can still get your head in the game!

Every season has a start and an end. Let’s take football for example. You can’t throw a few linebackers and quarterbacks on a field mid-May and tell them to play for the SuperBowl ring. There needs to be officials present and aware of what is going on… not to mention some team preparation and uniform fittings.

The same logic applies to taxes. Taxpayers can prepare for tax season all they want by gathering documents and sorting receipts. It doesn’t mean that you can submit your return to the IRS before the season starts and expect them to accept it. That’s because there are annual changes and documents that need to be issued prior to the start date.

Why are tax preparers saying that 2015 tax preparation is available now?

Some online tax preparation websites are claiming that 2015 tax returns can be prepared and filed. Well, in their defense, that’s half true. In fact, they should be advertising that you can prepare now and file much later (once the IRS starts accepting tax returns).

This may sound tempting but it could just end in more time spent on taxes than really necessary. What do we mean? Well for one, the IRS does not release the new tax forms until the very end of the year (We’re talking post Eggnog binge). That means that all of the information that you are entering onto your account may be incorrect. Not to mention that the financial year hasn’t ended yet so the income amount you enter on your account will need to be updated, regardless come January when you are issued your W-2 form from your employer(s). Read the rest of this entry »

W-2 or W-4 Form: How Do They Affect My Taxes?

Posted by Tax Advisor on May 5th, 2015
Last modified: May 21, 2015

Are you confused on what a W-4 form is? How about a W-2?

You’re not alone.

The truth is, most of us don’t look at these complicated IRS forms on a daily basis, so when we do, we’re pretty lost!  However, it’s important to know the difference between a W-4  and W-2 as both impact  how much tax is taken from your paycheck and how big your refund may be when you file your taxes.

When do I need to look at these IRS forms?

W-4: You’ll receive a blank W-4 when you start a new job. As a new employee, you’ll be required to fill out this form.

W-2: Each year, at the end of January, you’ll receive a W-2 from each of your employers. You’ll refer to this form when preparing your tax return. Read the rest of this entry »

Last Day to Claim a 2011 Tax Refund is April 15th!

Posted by Tax Advisor on April 8th, 2015
Last modified: April 8, 2015

Hurry – Wednesday, April 15th is the last day to claim a 2011 Tax Refund! 

April 15, 2015 is not only Tax Day for current year tax returns, it’s also the very last day to file a 2011 tax return and still claim a 2011 refund.

That’s because the IRS Statute of Limitations only allows filers three years from the April 15 deadline to claim a tax refund. So, it won’t matter whether you took a tax extension back in 2012.

So where does the unclaimed money go after the three years? You guessed it- the IRS keeps it!

Don’t hand over your hard earned money. File your 2011 tax return today and claim your refund! Read the rest of this entry »

Does California Tax Income Earned in Other States?

Posted by Tax Advisor on April 3rd, 2015
Last modified: April 21, 2015

Yes, California taxes income earned from ALL state sources.

If you’re a California resident, you’re no stranger to high tax rates. In fact, you pay the highest income tax in the country!

Here’s another fact: if you earned income working in another state, you’ll still be forced to pay the same, high California tax rate, even if that other state has a lower tax rate.

According to, California residents  are “taxed on ALL income, including income from sources outside California.”

What About Income From a Non-Income Tax State?

If you earned income in one of the seven states that doesn’t assess income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming), or one of the two states that have no tax on wages (Tennessee and New Hampshire), you’re still required to pay tax on that income to the state of California.

So, let’s say you work remotely from your home in San Diego for a company located in Texas. When filing, you’ll report this income on your California tax return. You’ll also pay a chunk of CA tax on it.

The one piece of good news is that you won’t need to file a non-resident tax return to the tax-free state. You’ll only be required to file a resident return to California. Read the rest of this entry »

Earned Income Tax Credit Tips for Married Filers

Posted by Tax Advisor on March 27th, 2015
Last modified: April 21, 2015

First comes love, then comes marriage, then comes a baby… and the Earned Income Tax Credit?

Here’s one for the next round of Jeopardy: the Earned Income Tax Credit or EITC was designed to offset the burden of Social Security taxes paid by low to middle income working families.

And here’s one you can take to bank: if you find yourself struggling to provide for your family you may qualify for the EITC and increase your refund at tax time .

Whether you qualify, not to mention the amount of the credit you’ll receive, depends on your income and how many qualifying children you’re supporting.

Eligibility is based on your income and your filing status

First, in order to qualify, you must file your tax return as married filing jointly. Your filing status can not be filing separately.

Second, your income earned (that is, the wages you received from your job or the net profits you made from self employment), can not exceed a certain threshold.

If you’re married filing jointly, your 2014 adjusted gross income, must be less than:

  • $52,427: 3 or more qualifying children
  • $49,186: 2 qualifying children
  • $43,941: 1 qualifying child
  • $20,020: no qualifying children Read the rest of this entry »

Earned Income Tax Credit Tips for Single & Head of Household Filers

Posted by Tax Advisor on March 26th, 2015
Last modified: April 21, 2015

The Earned Income Tax Credit can add a total of up to $6,044 to your tax refund!

Being a single parent is no picnic. Parenthood is a tough gig, especially when you’re on your own.

Raising a family on one source of income is enough of a headache. On top of that, you have dinner to cook, homework to help with, and sports games to attend. It’s clear, you have a lot on your plate and could use more money in your pocket.

Here’s something you must know: to lessen the financial burden of being a single parent, the IRS offers the Earned Income Tax Credit to qualifying tax filers.

Why Your Income Matters

The EITC or EIC is a refundable tax credit that is only offered to taxpayers who earn low-to-moderate income from their job or from being self-employed. That means if you don’t work, you cannot claim the credit.

In addition, once your income goes over a certain threshold, you won’t qualify to receive the tax credit. Read the rest of this entry »

Tax Deductions for Landlords (Part 3)

Posted by Tax Advisor on March 25th, 2015
Last modified: April 21, 2015

Landlords can also deduct rental property depreciation…

In part 1 and part 2 of this article, we explained that the services and expenses that you paid for could be included as deductions on your tax return.

In addition to these expenses, you can deduct the depreciation of your rental property.

In other words, you can deduct the “wear and tear” costs of the rental property, including any improvements.

Confused? No worries! Keep reading and we’ll get to the bottom of what depreciation means, and explain what types of improvements you can include on your tax return.

What Does “Depreciation” Mean?

For tax purposes, you can deduct the cost of your property along with any improvements you made to it, in the form of depreciation.

Think of depreciation as a way to recover the costs associated with your rental property.

You won’t deduct the cost of buying or improving your rental property as one large tax deduction. Instead, you’ll spread the costs across the “life” of the property.

The amount you can depreciate is dependent on a variety of factors, such as how long the property (or improvement) will last and what it is. To learn more, visit IRS Publication 527, Residential Rental Property. 

What Qualifies?

Owning a piece of property does not automatically qualify you to deduct it’s depreciation value. To deduct the depreciation of a rental property, the IRS requires that you also meet the following criteria:

  • The property produces income (in other words, you rent it out).
  • The property has a “useful life”, meaning it will eventually wear out, get used up, etc. (For example, a house has a useful life while an unused piece of land you own does not.)
  • The useful life of the property is longer than one year. Read the rest of this entry »

Tax Deductions for Landlords (Part 2)

Posted by Tax Advisor on March 20th, 2015
Last modified: April 21, 2015

More landlord tax deductions

As a landlord, you know first hand how fast the “little things” really add up.

Filling up the gas tank after traveling to pick up rent checks, fixing a broken window, and replacing a lock  are just a few examples of expenses that total up over time.

The good news it that each of the expenses just mentioned is in fact tax deductible. Yes, even your vehicle mileage.

In part 1 of this article, we explained that the services you paid for could be included as deductible rental expenses. There are other landlord tax deductions you’ll want to include on your tax return.

What other rental expenses can I include as a deduction?

If you earned rental income, as we mentioned, you can deduct the expenses that you paid in relation to:

Tax Deductions for Landlords (Part 1)

Posted by Tax Advisor on March 20th, 2015
Last modified: April 21, 2015

There are quite a few, often-overlooked expenses that landlords can report as a tax deduction.

If you own rental real estate, you must report the income you earned from this property on your federal tax return. You will also be required to pay tax on your rental income if you made a profit.

First, keep in mind that aside from the monthly payments you receive from your tenants, taxable rental income also includes:

  • advance rent payments
  • security deposits used as a final payment of rent
  • payments for canceling of a lease
  • property or services received in place of money, as rent

So, what’s considered a “rental expense”?

On the plus side, rental properties offer more tax benefits than most investments. In fact, you can deduct a majority of the rental expenses you had during the year. According to the IRS, you can report expenses related to the following:

  1. upkeep & maintenance of the property
  2. conservation & management of the property

Landlord tax deductions also include contract work!

Remember when you forked over thousands to a plumber after your tenant called complaining that the toilet wasn’t flushing?  How about that week the roof collapsed from snowfall and you were forced to track down a roofer?

These (often unexpected) headaches come along with life as a landlord. Fortunately, they are related to the upkeep and maintenance of the property and thus, tax deductible expenses. Read the rest of this entry »