Does your tax cancellation to-do list include a car title loan?
As we say goodbye to 2012, we are still looking back as we start working on our income taxes and looking for a workable cancellation that will help us get more refund or avoid paying too much. Charitable donations have long been a part of tax write-offs, and while we can’t count how much we’ve donated in recent weeks, we can certainly look forward to what we’ll be able to write off once 2013 ends. Here are a few things to think about:
* Do you have donations? Be sure to get dated receipts for all your donations. Income taxes are deducted from calendar years, so if your contribution is not dated for the tax year you are claiming; it won’t count Whether it’s a tangible donation or one made by credit card or check, you need that receipt to show that you made your donation in the fiscal calendar year.
Donations made by credit card are deductible for the tax year even if you don’t make the payment until the following year. A contribution made by check is always deductible for the current tax year if it is mailed before the last day of December of that year, says the Internal Revenue Service. If you were generous to a friend or family member, unfortunately that does not count as a charitable donation and is not eligible to be written off on your taxes.
* Get the most out of that IRA, Roth Ira, or 401K! Who couldn’t use a little more cushion in their retirement fund? You can do this by maximizing your annual employment contribution during the filing year. The maximum contribution for 2012 is $17,000, but this year it will go up to $17,500. If you’re age 50 or older and want to “catch up,” you can contribute extra based on the filing year.
*Moving Donations: Moving and not taking that extra car, boat or RV with you? If so, and you want to donate to charity, keep in mind that the amount you will pay off will be based on the fair market value at the time the car, boat, or trailer is sold by the charity. Don’t confuse this with what you would ask for the vehicle if you sold it yourself. This applies to deductions with a value of $500 or more.
*Tax-Deductible Interest Payments- At one point, taxpayers used to be able to write off credit card interest until Tax Reform of 1986 came into play. Today, the IRS is very clear about what types of interest can be paid. cancel in an effort to reduce your tax payment or recover more of that long-awaited tax return. This is what you can cancel:
-Interest paid on mortgage loans, including mortgages and home equity lines of credit.
-Interest paid on outstanding student loans. That is, the interest payments that are actually being made. Interest that increases but is not canceled does not count. -Interest paid when borrowing money to buy an investment property.
-Interest paid on credit cards when used solely for business purposes. This does not mean using a company credit card for personal use and then canceling it.
Unfortunately, interest paid on any other type of credit card or loan, including auto loans, car title loans, and payday loans, does not count as interest you can write off on your taxes. If you decide to get a car title loan and think you’ll get some of that interest back on your tax return, think again.