WASHINGTON - The Internal Revenue Service today advised teachers and other educators to save their receipts for books and other classroom supplies. They will be able to deduct up to $250 of such expenses again this year, following recently-enacted legislation. The Working Families Tax Relief Act of 2004 reinstated the educator expense deduction, which had expired at the end of last year, for both 2004 and 2005.

Expenses incurred any time this year may qualify for the deduction, not just those since the Act was signed on October 4.  The deduction is available to eligible educators in public or private elementary or secondary schools. To be eligible, a person must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide.

An educator may subtract up to $250 of qualified out-of-pocket expenses when figuring adjusted gross income (AGI). This deduction is available whether or not the taxpayer itemizes deductions on Schedule A.

As a reminder, any expenses over the initial $250 is deducted on Schedule A in other deductions. However,  these other deductions, including educators expenses, will have to exceed $250.00 of AGI to be included.
Text Box: WASHINGTON - The Internal Revenue Service today advised teachers and other educators to save their receipts for books and other classroom supplies. They will be able to deduct up to $250 of such expenses again this year, following recently-enacted legislation. The Working Families Tax Relief Act of 2004 reinstated the educator expense deduction, which had expired at the end of last year, for both 2004 and 2005. Expenses incurred any time this year may qualify for the deduction, not just those since the Act was signed on October 4.  The deduction is available to eligible educators in public or private elementary or secondary schools. To be eligible, a person must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide. An educator may subtract up to $250 of qualified out-of-pocket expenses when figuring adjusted gross income (AGI). This deduction is available whether or not the taxpayer itemizes deductions on Schedule A. As a reminder, any expenses over the initial $250 is deducted on Schedule A in other deductions. However,  these other deductions, including educators expenses, will have to exceed $250.00 of AGI to be included.

Educators Please Save Receipts

Text Box: Educators Please Save Receipts

Please Remember

• Remember to donate your unwanted, yet usable good to a qualified organization.

• Remember to ask for a tax conference with your tax advisor in December.

• Remember to pay an extra house loan payment before the end of the year.

• Remember to unload your investment losers before the end of December.

• Remember to plan for an IRA or Roth  ASAP after the first of the year and before April 15, 2005.

• Remember to make your cash donations and get a receipt before December 31, 2004.

• Remember your wife’s Christmas present. Text Box: Please Remember • Remember to donate your unwanted, yet usable good to a qualified organization. • Remember to ask for a tax conference with your tax advisor in December. • Remember to pay an extra house loan payment before the end of the year. • Remember to unload your investment losers before the end of December. • Remember to plan for an IRA or Roth  ASAP after the first of the year and before April 15, 2005. • Remember to make your cash donations and get a receipt before December 31, 2004. • Remember your wife’s Christmas present.

Inside this issue:

 

 

 
Heartland  Tax Service Inc.
 
 

 
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Have you gambled this year? Read on!

 

 
Text Box: Have you gambled this year? Read on!    

Hit a big one in 2003? You must report all gambling winnings as income on your tax return.

Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other non cash prizes.

Generally, if you receive $600 ($1,200 from bingo and slot machines and $1,500 from keno) or more in gambling winnings, the payer is required to issue you a Form W-2G. If you have won more than $5,000, the payer may be required to withhold 25% of the proceeds for Federal income tax. However, if you did not provide your Social Security number to the payer, the amount withheld will be 28%.

The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.

So keep a daily log to document all winnings and losses.

 

 

 

 
Text Box: Hit a big one in 2003? You must report all gambling winnings as income on your tax return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other non cash prizes. Generally, if you receive $600 ($1,200 from bingo and slot machines and $1,500 from keno) or more in gambling winnings, the payer is required to issue you a Form W-2G. If you have won more than $5,000, the payer may be required to withhold 25% of the proceeds for Federal income tax. However, if you did not provide your Social Security number to the payer, the amount withheld will be 28%. The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings. So keep a daily log to document all winnings and losses.        

 

 

 

 

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Welcome to another year:

I can’t believe that we are approaching 2005. It seems like just a few days ago we finished tax returns for 2003. I wish that I could tell you that things haven’t changed but they have. There have been tax changes from January 1 until early November. Congress is still working on several changes Bush wants but time is running out.

Our crew wants to tell you that we are here for you again. We offer 24/7/365 coverage by E-mail, telephone, cell and personal contact. We electronic file your return so that you get your refund directly deposited by the second Friday or mailed by the following week.

Other services:  We ask that you let us help you with any correspondence from the IRS. Our friends there have notified us that the IRS has hired more people to review more returns. We are able to advise you of your rights and will help handle the problem. If you cannot pay your tax bill, we will help you with a payment plan or an OIC, if eligible. We also offer RALs.

Our crew will advise you if you desire to set up a business entity; either a sole proprietor, partnership, or corporation. We will do all the paperwork and help you with all tax returns.

Again, welcome to the new year. Go to our web site a visit. Make your appointment early.

 

 
Text Box: Welcome to another year: I can’t believe that we are approaching 2005. It seems like just a few days ago we finished tax returns for 2003. I wish that I could tell you that things haven’t changed but they have. There have been tax changes from January 1 until early November. Congress is still working on several changes Bush wants but time is running out. Our crew wants to tell you that we are here for you again. We offer 24/7/365 coverage by E-mail, telephone, cell and personal contact. We electronic file your return so that you get your refund directly deposited by the second Friday or mailed by the following week. Other services:  We ask that you let us help you with any correspondence from the IRS. Our friends there have notified us that the IRS has hired more people to review more returns. We are able to advise you of your rights and will help handle the problem. If you cannot pay your tax bill, we will help you with a payment plan or an OIC, if eligible. We also offer RALs. Our crew will advise you if you desire to set up a business entity; either a sole proprietor, partnership, or corporation. We will do all the paperwork and help you with all tax returns. Again, welcome to the new year. Go to our web site a visit. Make your appointment early.    

Mileage rates for tax year 2004

 

 
Text Box: Mileage rates for tax year 2004    

WASHINGTON — The Internal Revenue Service today released the optional standard mileage rates to use for 2004 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.

To reduce a recordkeeping burden, the IRS also announced that taxpayers who use no more than four vehicles at the same time for business purposes may use the standard mileage rate, starting in 2004. Currently, those using more than one vehicle at a time cannot use the standard rate at all, leaving them to track the actual expenses for each vehicle.

“With this change, more than 800,000 businesses will become eligible to use the standard mileage rate,” said IRS Commissioner Mark W. Everson. “This reflects our ongoing interest in reducing the burden for businesses to comply with the tax laws.”

A taxpayer may not use the standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, or for any vehicle used for hire. 

37.5 cents a mile for all business miles driven, up from 36 cents a mile in 2003; A taxpayer may not use the standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, or for any vehicle used for hire. 

The 37.5 cents a mile for all business miles driven, is up from 36 cents a mile in 2003;

 

 

 

 
Text Box: WASHINGTON — The Internal Revenue Service today released the optional standard mileage rates to use for 2004 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes. To reduce a recordkeeping burden, the IRS also announced that taxpayers who use no more than four vehicles at the same time for business purposes may use the standard mileage rate, starting in 2004. Currently, those using more than one vehicle at a time cannot use the standard rate at all, leaving them to track the actual expenses for each vehicle. “With this change, more than 800,000 businesses will become eligible to use the standard mileage rate,” said IRS Commissioner Mark W. Everson. “This reflects our ongoing interest in reducing the burden for businesses to comply with the tax laws.” A taxpayer may not use the standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, or for any vehicle used for hire.  37.5 cents a mile for all business miles driven, up from 36 cents a mile in 2003; A taxpayer may not use the standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, or for any vehicle used for hire.  The 37.5 cents a mile for all business miles driven, is up from 36 cents a mile in 2003;