IRS Announces E-file Open Day, Be the First in Line for Your Tax Refund

The IRS announced today that it will begin processing tax returns on 1/31/14. The good news for you?  Our services are open for business and will begin accepting tax returns on January 2, 2014!

You can get started today and file early to be first in line for your maximum tax refund. Last year, the average federal tax refund was almost $3,000. We know how important that money is to you – whether you need to pay off holiday bills or pay your rent.

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It’s why we’re encouraging people to file as soon as they can.

Here are 4 great reasons to e-file online with us:

1.    Early Bird Gets the Tax Refund

    We will hold and securely submit your tax return to the IRS when they begin processing returns on a first-in, first-out basis. That means filing as early as possible puts you first in line for your tax refund.

2.   E-file with Direct Deposit, Fastest Way to Get Your Tax Refund

    E-file with direct deposit is the fastest way to get your tax refund. The IRS doesn’t anticipate any associated tax refund delays once processing by them begin on January 31.  The IRS expects to issue 9 out of 10 tax refunds in 21 days or less as in previous years.

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 3.    Our Online service is accurate and Easy to Use

    This is up to date with all recent tax law changes. By answering a few simple questions about your life, you can quickly prepare your tax return and get your maximum tax refund. We will searches 350 tax deductions and makes sure your taxes are done right.

 4.    Get Expert Answers to Your Tax Questions
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    If you have tax questions you can get your answer from our community or talk to our credentialed tax experts who are all CPAs, and Enrolled Agents, one-on-one via chat or phone.

5 Simple Tax Tips for End-of-the-Year Giving

With the hustle and bustle of the holidays, the last things we want to think about are taxes. But since the holidays are a time to think about giving, Razoo have teamed up to provide simple tips for smart charitable giving that can save you money when it’s time to file your taxes.

Smart Charitable Giving Tips:

1. Donate by credit card

Did you know that donations made via credit card are deductible in the year they are charged and not the year that they are paid? Don’t let all that holiday shopping keep you from donating in 2013 – by donating to your favorite charity on Razoo by Dec. 31 (also one of the largest charitable giving days of the year), you can hold on paying the bill until 2014. In addition, you can check out our website to estimate your taxes and see if you need to make any last minute tax moves.

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2. Give the gift that keeps on giving

Extend the joy of giving to your family and friends this year. Razoo’s Giving Cards enable you to gift $10 – $500 for the recipient to donate to his or her favorite cause. Not only do you get to share the happiness that is proven to come along with giving to others, but you get to keep the tax deduction from your gift giving.

3. “Are you registered?”

There will always be a Grinch or three that sets up fake charitable organizations to pull at people’s heartstrings this time of year. Make sure the cause you choose is a registered 501c3 organization. The Razoo website includes more than 1 million registered charitable organizations, so you can rest easy knowing your money is going to the right place.
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4. Track your donations

Keep a list of your charitable donations so you can be sure to account for every dollar come tax time. You can save yourself some time by donating to your favorite charities on Razoo, as the company will send you an itemized list of your donations in time for tax season. You can also check out our website free app that helps you track and value these types of donations.

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5. “Spring cleaning” in December

Get a head-start on your spring cleaning, help those less fortunate, and get a tax deduction in the process! Donate old clothes, books, household items, toys and sporting goods to a local charity, and be sure to keep the receipts.

As you feel the holiday spirit this season, spread the joy to your favorite charity and give yourself the gift of smart tax planning while you’re at it!

Expiring Tax Provisions

Expiring tax provisions, and steps to take before the end of 2013, Part II

In my last blog, I discussed three tax provisions that expire at the end of 2013, and some ideas about what you should do now. Here are three more tax provisions that are set to expire soon.

Energy credits. Have you been hankering for one of those new plug-in vehicles? If you buy an electric drive motorcycle or a three wheel plug-in vehicle, you can get a credit for up to $7,500. But you’d better act fast, since this credit is set to expire at the end of the year.

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The choice of such vehicles is sparse, but there are many of these vehicles still on the drawing board and set to still be manufactured beginning in 2014, so I’m guessing that this expiring energy credit may be renewed or re-enacted at some point. But if you want to be sure you get the credit, move fast and drive away in the vehicle by December 31.

There are also energy credits available for 10% of the cost, up to a $500 credit limit, for installing insulation or energy-efficient windows, water heaters, doors and roofs in your home or for improved efficient heating and cooling systems. But these improvements need to be in place by the end of the year, so you’d better get moving if you want to take advantage of these expiring tax credits.

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Home mortgage debt relief. During the housing downturn, taxpayers who owed more than their homes were worth and lost their homes in foreclosure or short sale weren’t required to pay tax on the mortgage debt that exceeded the value of the home. But beginning in 2014, if you are relieved of debt in a mortgage modification, short sale or foreclosure, it could once again result in taxable income.

If you are in the process of modifying your mortgage or short-selling your home, try to get the transaction completed before the end of the year to take advantage of current rules. If your home is in foreclosure, you may want to talk to the mortgage company about deeding the property back to them before year-end, if that seems like your best option.

Business property acquisition. When you buy equipment to be used in your business, you are able to expense the cost of the equipment in the year you buy it or to deduct 50% of the cost as bonus depreciation. Both those deductions will be curtailed at the end of 2013.
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Unless Congress acts to extend them, in 2014 there will be no bonus depreciation and the expensing provisions will be reduced from the current $500,000 to only $25,000 of property eligible for write-off in the year of acquisition. So if you are planning to buy large amounts of business property soon, buying it before the end of the year may save you taxes.

Save on Your Taxes with Year-End Charitable Giving

Although your charitable nature surely isn’t solely motivated by the potential for a tax deduction, saving a few bucks on your taxes is a nice side benefit.  To make sure you maximize the tax value of any of your planned philanthropy before the end of the year, consider the following guidelines:

To Whom Can I Make Charitable Donations?

Although Frankie, your buddy from high school, might be down and out on his luck, neither your decision to buy him lunch nor the $50 you gave him while no one else was looking will qualify as a tax deduction. That’s because Frankie isn’t a charity – at least not in the eyes of the Internal Revenue Service (IRS).

Only donations to qualified charities are potentially deductible.  You can find a list of qualified charities on the IRS web site here, but note that religious organizations and government agencies may qualify even if they are not listed.

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What Kind of Donations Are Deductible?

To be potentially deductible, you can give a qualified charitable organization money, whether by cash, check, or credit card charge.  You can also give a charity physical objects, such as clothes, kitchen items, or old furniture.  Just about anything that has legitimate value is potentially deductible.

Keep in mind that the physical objects must be in at least “good” condition—no deduction is available for those socks with just a few too many holes in them.  TurboTax Its Deductible will properly track and value your donated items.

By When Must I make My Donation to Be Able to Potentially Deduct it in 2013?

Donations made by December 31, 2013 are deductible on your 2013 tax return you will file in 2014.  To be considered “made by December 31,” a cash gift must be received by the end of the year.  A check must be mailed before the end of the year, even if it is not deposited by the receiving organization until January.

If you choose to make a gift by credit card, the charge must occur by December 31. Such a donation will count as a potential 2013 tax deduction even though you probably won’t actually pay the credit card bill until early 2014.  As to physical items you donate, each must be received by the qualifying charity prior to year end to qualify as a potential tax deduction.

What Proof Do I Need of My Charitable Donations?

Ideally, you should receive documentation for every gift you make.  In addition, all cash and physical gifts above $250 require a receipt to be potentially deductible.

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Why Do You Keep Saying “Potentially” Deductible Instead of Just “Deductible?” Are You Mincing Words?

Even if your donation meets all of the requirements discussed above, your donations still might not lead tax savings.  That is because not everyone is eligible to deduct their qualifying charitable contributions.

Only those who itemize their deductions can benefit from the charitable contribution deduction, however if you have other itemized deductions like home mortgage interest you may be able to take itemized deductions instead of standard deductions just by not forgetting your itemized deductions.

Regardless, TurboTax will compare the total of your itemized deductions to the standard deduction and give you the one that gives you the most tax savings.  You don’t need to worry about how to figure out which deduction gives you the most tax savings.

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Charitable giving is an important part of society and benefits you and the recipient in ways difficult to quantify at the time you make the actual gift.  With the tips above, hopefully you will now know what charitable donations will help those in need and give you more money in your pocket.

Mortgage Debt Relief – Is My Forgiven Debt on My Home Still Tax Free?

Were you a beneficiary of mortgage debt relief this year? If so, it’s important that you understand how that debt relief will impact your 2013 taxes, especially since 2013 is the final year of The Mortgage Debt Relief Act of 2007.

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Debt that was reduced through restructuring and forgiveness may qualify for relief. We’ll discuss the rules so you can figure out if that amount is tax free.

Debt Forgiveness Isn’t Normally Tax Free

Normally, debt forgiveness isn’t tax free. In many cases, you are required to pay taxes on the amount of the forgiven debt as if it is income. However, the Mortgage Forgiveness Debt Relief Act of 2007 has made it possible for you to avoid paying income tax on forgiven mortgage debt — at least until the law expires at the end of 2013.

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The law has been extended more than once since it was passed, because it was only intended to be temporary. Congress might decide to extend the law again, but as of right now, your forgiven mortgage debt is only tax free through the end of this year.

What are the Restrictions on the Mortgage Forgiveness Debt Relief Act of 2007?

As with most tax related laws, there are some requirements and restrictions that come with this law. First of all, the forgiven debt must be secured by your primary residence. Additionally, there is a $2 million limit on the amount that qualifies for those who are married filing jointly. You can also use the forgiveness provision and apply it to refinancing, as long as the old mortgage, immediately before the refinance, qualifies.

It’s important to note that this law only applies to mortgage debt. Other types of forgiven debt, such as credit card debt, aren’t included. If your other types of debt have been forgiven (except in specific circumstances), you will have to treat the forgiven debt as income, and pay taxes on it.

What is Mortgage Forgiveness?

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Mortgage forgiveness might come as a result of a loan modification or a short sale. Basically, if the lender says that you don’t have to pay a portion of your mortgage, that is the amount forgiven. So, if you have a balance of $170,000 when you perform a short sale for $150,000, the amount forgiven is $20,000. In normal circumstance, you would add that $20,000 to your income, which means higher taxes (especially if the amount bumps you up into another tax bracket). However, until the end of 2013, you don’t have to pay taxes on that amount, as long as you meet the requirements.