5 Tax Tips if you Travel while Giving Services to Charity

From IRS Tax Tips:

Do you plan to donate your services to charity this summer? Will you travel as part of the service? If so, some travel expenses may help lower your taxes when you file your tax return next year. Here are five tax tips you should know if you travel while giving your services to charity.

1.?You can?t deduct the value of your services that you give to charity. But you may be able to deduct some out-of-pocket costs you pay to give your services. This can include the cost of travel. All out-of pocket costs must be:

  • unreimbursed,
  • directly connected with the services,
  • expenses you had only because of the services you gave, and
  • not personal, living or family expenses.

2.?Your volunteer work must be for a qualified charity. Most groups other than churches and governments must apply to the IRS to become qualified. Ask the group about its IRS status before you donate. You can also use the Select Check tool on IRS.gov to check the group?s status.

3.?Some types of travel do not qualify for a tax deduction. For example, you can?t deduct your costs if a significant part of the trip involves recreation or a vacation. For more on these rules see Publication 526, Charitable Contributions.

4.?You can deduct your travel expenses if your work is real and substantial throughout the trip. You can?t deduct expenses if you only have nominal duties or do not have any duties for significant parts of the trip.

5.?Deductible travel expenses may include:

  • air, rail and bus transportation,
  • car expenses,
  • lodging costs,
  • the cost of meals, and
  • taxi or other transportation costs between the airport or station and your hotel.

For more see Publication 526, Charitable Contributions. You can get it on IRS.gov or by calling 800-TAX-FORM (800-829-3676).
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Vacation Home Rentals

From IRS Tax Tips:

If you rent a home to others, you usually must report the rental income on your tax return. But you may not have to report the income if the rental period is short and you also use the property as your home. In most cases, you can deduct the costs of renting your property. However, your deduction may be limited if you also use the property as your home.

Here is some basic tax information that you should know if you rent out a vacation home:

  • Vacation Home.? A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.
  • Schedule E.? You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax.
  • Used as a Home.? If the property is ?used as a home,? your rental expense deduction is limited. This means your deduction for rental expenses can?t be more than the rent you received. For more about these rules, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
  • Divide Expenses.? If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use.
  • Personal Use.? Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also personal use.
  • Schedule A.? Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
  • Rented Less than 15 Days.? If the property is ?used as a home? and you rent it out fewer than 15 days per year, you do not have to report the rental income.

Kids in Camp? Get Credit for that

Kids in camp? Make sure you get credit for child and dependent care this summer.

Here?are the IRS Tips to “Get Credit for Child and Dependent Care This Summer”:

IRS Special Edition Tax Tip 2014-16, June 11, 2014

Many parents pay for childcare or day camps in the summer while they work. If this applies to you, your costs may qualify for a federal tax credit that can lower your taxes. Here are 10 facts that you should know about the Child and Dependent Care Credit:

  1. Your expenses must be for the care of one or more qualifying persons. Your dependent child or children under age 13 usually qualify. For more about this rule see Publication 503, Child and Dependent Care Expenses.
  2. Your expenses for care must be work-related. This means that you must pay for the care so you can work or look for work. This rule also applies to your spouse if you file a joint return. Your spouse meets this rule during any month they are a full-time student. They also meet it if they?re physically or mentally incapable of self-care.
  3. You must have earned income, such as from wages, salaries and tips. It also includes net earnings from self-employment. Your spouse must also have earned income if you file jointly. Your spouse is treated as having earned income for any month that they are a full-time student or incapable of self-care. This rule also applies to you if you file a joint return. Refer to Publication 503 for more details.
  4. As a rule, if you?re married you must file a joint return to take the credit. But this rule doesn?t apply if you?re legally separated or if you and your spouse live apart.
  5. You may qualify for the credit whether you pay for care at home, at a daycare facility or at a day camp.
  6. The credit is a percentage of the qualified expenses you pay. It can be as much as 35 percent of your expenses, depending on your income.
  7. The total expense that you can use for the credit in a year is limited. The limit is $3,000 for one qualifying person or $6,000 for two or more.
  8. Overnight camp or summer school tutoring costs do not qualify. You can?t include the cost of care provided by your spouse or your child who is under age 19 at the end of the year. You also cannot count the cost of care given by a person you can claim as your dependent. Special rules apply if you get dependent care benefits from your employer.
  9. Keep all your receipts and records. Make sure to note the name, address and Social Security number or employer identification number of the care provider. You must report this information when you claim the credit on your tax return.
  10. Remember that this credit is not just a summer tax benefit. You may be able to claim it for care you pay for throughout the year.

IRS DECREASES MILEAGE RATE FOR 2014

The IRS announced that the standard mileage rate will decrease to 56 cents per business mile driven in 2014.? That is a decrease of approximately 0.9% over the 56.5 cents allowed in 2013.? According to the IRS, “The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile.”

When you use your car for business, driving between job sites is deductible.? So is driving between your home and a temporary job site, job interviews, and conferences.? Commuting between your home and a regular place of business generally isn’t tax deductible.

Standard Mileage Rates Versus Actual Expenses

There are two ways for you to calculate your automobile expenses.? You can either claim $.56 per business mile driven in 2014 (decreased?from $.565 for 2013), or you can base your deduction on the percentage of miles your car was driven for business purposes multiplied by the actual costs incurred during the year.? Allowable costs include gas, insurance, repairs, parking at home, and either your lease payments, or if you own your car, a factor for depreciation.

Generally, unless you drive your car?relatively few miles each year,?with most of those miles?being allowable business miles, you’re often times better off over time by basing your deduction on the standard mileage rate.

For Example

Let’s say you lease a car for $400 a month that you drive only 3,000 total miles during the year.? And of those miles, 2,000 qualify as deductible business miles.? By calculating your deduction based on the standard mileage rate, you’ll end up with a deduction of just $1,120 (2,000 business miles * $.565 per mile).

What would your deduction be based on the actual expenses incurred, assuming you spend $1,200 on insurance, $.10 per mile driven for gas, and $1,200 on parking at home?? Based on $7,500 of total automobile expenses (including the lease payments), multiplied by two-thirds (2,000 business miles divided by 3,000 total miles), your allowable deduction for your automobile expenses jumps to $5,000 – almost five times the $1,120 allowed using the standard mileage rate.

Now let’s see what happens if you drive 20,000 total miles during the year.?? Assuming your allowable business miles remains at 2,000, you can either claim an automobile deduction of $1,120 based on the standard mileage rate, or $920 based on one-tenth (2,000 business miles divided by 20,000 total miles) of your actual automobile expenses incurred.

Expense

3,000
total miles
driven

20,000
total miles
driven

Lease payments

$4,800

$4,800

Insurance

$1,200

$1,200

Gas ($.10 per mile ? driven)

$300

$2,000

Parking at home

$1,200

$1,200

Total costs

$7,500

$9,200

Business use % on ? 2,000 business miles driven

66.67%

10%

Allowable deduction ? for auto expenses based on actual expenses

$5,000

$920

Allowable deduction ? for auto expenses based on actual expenses

$5,000

$920

How to Claim The Deduction

Taxpayers who are compensated as employees generally will claim their deductible automobile expenses as an unreimbursed employee business expense. These type expenses are reported on a Form 2106 and are deducted as a miscellaneous itemized deduction on the Schedule A.? Keep in mind that miscellaneous itemized deductions are only allowable to the extent they exceed 2% of your income, and are not allowable when calculating the Alternative Minimum Tax (AMT).

Those taxpayers compensated as independent contractors will?generally claim their allowable automobile expenses directly against their self-employment?income. For these taxpayers, automobile expenses should be reported the Schedule C.

Other Deductible Miles

The use of an automobile in connection with a charitable activity is deductible at a rate of?14 cents per mile in 2014 and should be reported with other charitable contributions as an itemized deduction of the Schedule A.

You’ll deduct any mileage?driven in connection?with a qualified move at a rate of?23.5 cents per mile in 2014, down from 24 cents per mile in 2013, and should report that mileage along with your other allowable expenses on a Form 3903, Moving Expenses.

And don’t forget that?medical related mileage is also deductible.? For 2014, medical mileage is allowable at 23.5 cents per mile,?and should be reported with all other medical expenses on the Schedule A.

Deducting Un-reimbursed Professional Expenses

According to the IRS, to be deductible, an expenditure must be both “ordinary” and “necessary” in connection with your profession.? The IRS defines “ordinary” as common and accepted in a particular profession and “necessary” as helpful and appropriate for a particular profession.

Here?s a list of 16 professional expenditures commonly incurred by young health care professionals:

  • Automobile expenses
  • Beepers and pagers
  • Books/library
  • Cellular telephones?
  • Computer purchases
  • Education, examinations & licenses
  • Equipment & instruments
  • Job search
  • Malpractice insurance
  • Meals & entertainment
  • Parking & tolls
  • Professional dues, journals & subscriptions
  • Psychoanalysis as part of training
  • Supplies
  • ?Travel & lodging
  • Uniforms & cleaning

?Please note:? Employees may not deduct professional expenses that are eligible for reimbursement from their employer.