RC Tax & Accounting

 

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  FAQs
Change in Mileage Allowance
Filing Status When Filing Tax Returns
Determining Medical Expense Deductions
Earned Income Credit

Related Links
Internal Revenue Service
Georgia Dept. of Revenue
Georgia Secretary of State
Social Security
Related Forms
Individual Tax Deduction Checklist
Income Expense Worksheet
Rental Property Worksheet
Tax Organizer




Religious School Tuition: A Charitable Contribution

Q.  My child attends a religious-oriented school. May I deduct my tuition payments as a charitable contribution?
A.  No. This issue went all the way to the Ninth Circuit Court of Appeals a few months back and the court ruled against the parents.
Tuition paid to any religious school cannot be characterized as a contribution to charity because the student receives something - education - in return for the tuition.



Change in Mileage Allowance

» 2011 Standard Mileage Rates:
Jan. 1, 2011 - June 30, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks):
  • 51 cents per mile for business miles driven
  • 19 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations
July 1, 2011 - December 31, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks):
  • 55.5 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations
Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
  • 55.5 cents per mile for business miles driven
  • 23 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations



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Filing Status When Filing Tax Returns

In general, your filing status depends on whether you are considered unmarried or married. For federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife. Considered Unmarried persons: You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree. Considered Married: You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests.
  1. You are married and living together as husband and wife.
  2. You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.
  3. You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.
  4. You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.

» SINGLE:
Your filing status is single if, on the last day of the year, you are unmarried or legally separated from your spouse under a divorce or separate maintenance decree, and you do not qualify for another filing status.

» MARRIED FILING JOINTLY:
You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions. If you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.

» MARRIED FILING SEPARATELY:
You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. PLEASE NOTE: Special rules apply when utilizing this filing method which could cause you to pay more taxes.

» HEAD OF HOUSEHOLD:
You may be able to file as head of household if you meet all the following requirements.
  1. You are unmarried or "considered unmarried" on the last day of the year.
  2. You paid more than half the cost of keeping up a home for the year.
  3. A "qualifying person" lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the "qualifying person" is your dependent parent, he or she does not have to live with you.



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Determining Medical Expense Deductions

If you itemize your deductions on Form 1040, Schedule A, you may be able to deduct expenses you paid that year for medical care (including dental) for yourself, your spouse, and your dependents. You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. See Individual Tax Deduction Checklist for a list of deductible expenses.

You may not deduct funeral or burial expenses, health club dues, over-the-counter medicines, toothpaste, toiletries, cosmetics, a trip or program for the general improvement of your health, or most cosmetic surgery.

Medical expenses include insurance premiums paid for accident and health or qualified long-term care insurance. You may not deduct insurance premiums for life insurance, for policies providing for loss of wages because of illness or injury, or policies that pay you a guaranteed amount each week for a sickness. You also may not deduct insurance premiums paid by an employer-sponsored health insurance plan (cafeteria plan) unless the premiums are included in Box 1 of your Form W-2.



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Earned Income Credit

Eligibility for EITC

Besides filing a tax return, people must meet various requirements. Some of these requirements apply to everyone. Then there are additional requirements that only apply to families, and another set of requirements that only apply to people without children.

»» Rules for Everyone:
  • You must have earned income, such as wages, tips or the income you make from running a business or farm. Most other types of income, such as retirement pensions, though usually taxable, do not count as earned income.
  • You must have a valid Social Security number for yourself, your spouse and your qualifying children.
  • You can get the credit, even if you have a small amount of investment income, such as interest from a bank account. However, the amount of your investment income is limited to $3,150.
  • Your filing status must be single, head of household, married filing jointly or qualifying widow or widower. If you file as married filing separately, you cannot get the credit.
  • Generally, you must be either a U.S. Citizen or resident alien.
  • You cannot be a qualifying child of another person.
  • You cannot file Form 2555 or Form 2555-EZ. These forms are used to claim the foreign earned income exclusion, a tax benefit for Americans who live and work abroad.
In addition, your income must be below certain limits. For tax year 2011, both earned income and adjusted gross income (AGI) must each be less than:
  • $13,660 ($18,740 married filing jointly) with no qualifying children
  • $36,052 ($41,132 married filing jointly) with one qualifying child
  • $40,964 ($46,044 married filing jointly) with two qualifying children
  • $43,998 ($49,078 married filing jointly) with three or more qualifying children


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