Monday, January 25, 2010
Winter break is over and since most students are back in school we decided to cover the Educator Expense as our newest deduction of the week.
Details on the Deduction
The IRS allows qualifying teachers and educators to deduct up to $250 worth of un-reimbursed expenses related to teaching. Common examples include books, paper, crayons, binders, software, etc.
Who Qualifies?
In order to qualify for the deduction a taxpayer must be an individual who worked 900 hours or more teaching kindergarten through 12th grade in a school that provides elementary or secondary education. The deduction is also available to other taxpayers working in the education field such counselors, principals, or aides.
Outside the Classroom Expenses
In addition to supplies for inside the classroom you can also deduct a handful of other related expenses including gas spent on field trips, subscriptions to academic journals, and even fees paid in union dues.
Above-the-Line
The educator expense deduction is an above-the-line deduction, meaning that you can claim it even if you do not itemize your return. These above-the-line deductions are generally more advantageous since they are subtracted from a taxpayer's gross income, rather than their adjusted gross income. Additionally, above-the-line deductions are not subject to income-sensitive phase outs or limitations.
Last week President Obama signed H.R. 4462 – To accelerate the income tax benefits for charitable cash contributions for the relief of victims of the earthquake in Haiti. According to the Joint Committee on Taxation, the law will treat charitable contributions of cash made after January 11, 2010 and before March 1, 2010, as contributions made on December 31, 2009 if such contributions were for the purpose of providing relief to victims in areas affected by the earthquake in Haiti that occurred on January 12, 2010.
Thus, the effect of the provision is to give calendar-year taxpayers who make Haitian earthquake-related charitable contributions of cash after January 11, 2010 and before March 1, 2010, the opportunity to accelerate their tax benefit. Under the provision, such taxpayers may realize the tax benefit of such contributions by taking a deduction on their 2009 tax return.
The provision also clarifies the recordkeeping requirement for monetary contributions eligible for the accelerated income tax benefits described above. With respect to such contributions, a telephone bill will also satisfy the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution, and the amount of the contribution. Thus, for example, in the case of a charitable contribution made by text message and chargeable to a telephone or wireless account, a bill from the telecommunications company containing the relevant information will satisfy the recordkeeping requirement.
CEO Roni Deutch posted an entry to her personal blog last week with a list of the top 10 ways to donate to the Hatiain relief efforts. You can find a few of the items below, but be sure to head over to The Tax Lady Blog for the full list.
1. Cell Phone Donations
If you cannot afford to make a sizeable donation to the relief efforts then you can make a small and easy donation from your cell phone. You can text HAITI to 90999 to donate $10 to the American Red Cross, or text HAITI to 25383 for a $5 donation to the International Rescue Committee. You will see the charge on your next phone bill, so be sure to keep it stored with your other tax documents.
2. Larger Donations to the Red Cross
If you want to donate more then $10 to the Red Cross, and do not have time to send a dozen text messages, then you can use a credit card to donate either over the phone (1-800-REDCROSS) or by visiting their website. If you would like to mail a check then you can send it to the American Red Cross, P.O. Box 37243, Washington, D.C. 20013.
3. Clinton Bush Haiti Fund
In a sign of bipartisan support for Haiti, former presidents Bill Clinton and George W. Bush setup the nonprofit Clinton Bush Haiti Fund. As of today, the fund claims to have received over 126,000 contributions. You can donate through their website, or text QUAKE to 20222 to make a $10 donation through your phone. You could also mail donations to The Clinton Bush Haiti Fund, c/o William J. Clinton Foundation, Donations Department, 610 President Clinton Avenue, Little Rock, AR 72201.
In their newest press release the IRS is reminding tax-exempt organizations to make sure they file their annual information form on time. In 2010, the tax-exempt status of any non-profit that has not filed the required form in the last three years will be revoked.
The Pension Protection Act of 2006 requires that non-profit organizations that do not file a required information form for three consecutive years automatically lose their Federal tax-exempt status. This requirement has been in effect since the beginning of 2007.
A list of revoked organizations will be available to the public, as well as state charity and tax officials on this website.
If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.
Small non-profit organizations with annual receipts of $25,000 or less can file an electronic notice, Form 990-N (e-Postcard). They will need only a few basic pieces of information to file: the organization’s employer identification number, its tax year, legal name and mailing address, any other names used, an Internet address, if one exists, the name and address of a principal officer and a statement confirming the organization's annual gross receipts are normally $25,000 or less.
Continued at IRS.gov…