Finding Tax Deductions

Donating and Deducting

Familiar to most are the organizations such as Good Will which accept a variety of items and then resell them in thrift stores. However, there are other less known charities that accept specialized items, all of which can be claimed as charitable donations.

Be a Fairy Godmother or Godfather

Formal dresses can find new homes at the Cinderella Project of New Hampshire. The mission of this organization is to distribute formal dresses to high school students in New Hampshire who are facing financial difficulty. Sister organizations allow the same to be done in various states across the country. Donations of dresses, accessories, unopened cosmetics and hosiery, as well as monetary donations are accepted throughout the year. Through volunteers, known as "fairy godmothers and godfathers," the organization distributes the dresses to teens who are eligible.

"We wish our volunteers could all see the sighs of relief for the low income families so they can appropriate their budgets for school clothing instead of prom gowns," says Joanne Sowa of the Cinderella Project.

Information about donations as well as sister organizations can be found at http://www.thecinderellaprojectofnh.org/ or by contacting cinderellaprojnh@aol.com 603-472-8043.

Take a Step Up

Used athletic shoes aren't for the trash can anymore. Instead, they are recycled into athletic surfaces thanks to Nike and its Reuse-A-Shoe program which began in 1993. Any brand of athletic shoe can be donated to the charity which then shreds them and creates new surfaces such as basketball courts and running tracks for community parks and recreation facilities around the world that otherwise couldn't afford such expensive playing areas.

Shoes donated to the Reuse-A-Shoe program should not be tied together and should be mailed to an appropriate drop off center. Information about the program can be found on Nike's website at www.nikebiz.com. Follow the links under the "responsibility" tab then the "environment" tab. An interactive map is available for drop off locations.

Give It One More Read

Books are a great donation item. Local libraries often sell used books as fundraisers, and since many states have cut library budgets the sale of used books often provides for library activites such as children's summer reading programs. Most libraries, however, do not want books such as Reader's Digest, textbooks, and harlequin-style romance.

Textbooks do have their own place. Check for local adult literacy programs who often build their libraries around donated books. Daycares and YMCAs often do the same. One organization which accepts textbooks in quantity is Bridge to Asia. Through donations, it supplies educational materials to developing countries. Over 6 million books have been delivered to over 1000 different schools in various countries in the last 16 years of operation. Information can be found at 415-678-2990 http://www.bridge.org

By Kelly Ann Butterbaugh

Itemizers Can Deduct Certain Taxes

• State and local income taxes: You can choose to claim a state and local tax deduction for either income or sales taxes on your return. You can deduct any estimated taxes paid to state or local governments and any prior year's state or local income tax as long as they were paid during the tax year. If deducting sales taxes instead, you may deduct actual expenses or use the optional tables provided by the IRS to determine your deduction amount, relieving you of the need to save receipts. Sales taxes paid on motor vehicles and boats may be added to the table amount, but only up to the amount paid at the general sales tax rate.

• Real estate taxes: Deductible real estate taxes are usually any state, local or foreign taxes on real property. If a portion of your monthly mortgage payment goes into an escrow account and your lender periodically pays your real estate taxes to local governments out of this account, you can deduct only the amount actually paid during the year to the taxing authorities. Your lender will normally send you a Form 1098, Mortgage Interest Statement, at the end of the tax year with this information.

• Personal property taxes: Personal property taxes are deductible when they are based on the value of personal property, such as a boat or car. To be deductible, the tax must be charged to you on a yearly basis, even if it is collected more than once a year or less than once a year.

• Foreign income taxes: Generally, you can take either a deduction or a tax credit for foreign income taxes, but not for taxes paid on income that is excluded from U.S. tax.

For detailed information about the sales tax deduction, consult IRS Publication 600, State and Local General Sales Taxes, and the interactive State and Local Sales Tax Calculator found on IRS.gov. More information about each of these topics is available at IRS.gov. IRS forms and publications can be downloaded from the Web site or obtained by calling 800-TAX-FORM (800-829-3676).

Source: irs.gov

Tax Write Offs for Home Businesses

Home Business Tax Deduction Checklist

Is it deductible?

Mileage

• Do you drive to your customers' homes to make sales, close deals, or show products?
• Do you collect money from customers, drive to the bank to deposit it into a bank account set up for your business, and then deduct money from that account to order the products for your customers? (Direct sales reps do this often.)
• Do you drive to the store to buy supplies for your business?
• Do you drive to business meetings or conferences?
• Do you drive to locations to do research for your business?
• Do you drive to office supply stores to make copies?

Supplies

• Do you purchase items from your host company which you show to your customers as samples?
• Do you purchase basic office supplies?
• Do you have a computer that you use exclusively for your business?
• Do you purchase publications aimed at your business or that enhance your business? Do they provide information you use in your business?
• Do you send catalogs and flyers to your customers?
• Do you read books that are in the subject of your business?
• Do you display products from your business in your home?
• Do you purchase display products in your business?

Services

• Do you take customers to lunch or dinner?
• Do you pay web fees for your business web page?
• Do you have a separate phone line used exclusively for your business?
• Do you pay dues for a professional organization?
• Do you ever travel to conventions, meetings, or events that charge admission?
• Do you ever pay for a hotel while at these events?
• Do you hire someone to help with an aspect of your business?
• Do you pay notary fees?
• Do you incur postage costs in your business?

By Kelly Ann Butterbaugh

Keeping Track of Deductions Throughout The Year