There are few things you need to know before you give away your car to a charitable organization. Here are thee important used car donation tips.

1.    Understand that even crap has value

This is one of the most important things you must know, if you intend to save money on tax. You throw away, or give away items to some people just because it’s crap for you. Maybe it isn’t for somebody else. It isn’t for you as well.

You can donate almost anything you own, and anything you think is crap to charitable organization and earn a good deduction against it. The item you are about to donate, however, must be in good shape, at least it should be repairable.

2.    Once you donate your car, it’s not yours

Know that once you have donated your car, it is no longer yours. Many organizations would call you up after donation and ask you to fix certain problems that they found in the car. It is not your responsibility, and make this clear to them. Once they pick up the car, every expense related to it should be taken care of by them.

3.    Take care of the receipt

This is one of the most important used car donation tips. When you decide to donate your car, go to the towing company and get a temporary receipt. You will need to have this receipt when they pick your car. And this receipt is also used as evidence that you have donated your car to a particular organization though a particular towing company. This information would be necessary during filing deductions.

There are many other things you need to learn about used car donation. These are however the crucial ones, hence most important used car donation tips.

After reading the list I realized that I can include all medical expenses paid for myself, my spouse (no, I am still single), or any members of my family, as deductibles. Some of the common ones are listed below:

• Any amount paid for dental insurance, medical insurance or long term care insurance premiums.
• Insurance deductibles, which includes co-payments as well
• Fees paid to doctors, chiropractors, psychiatrists, health practitioners, dentists, etc.
• Expenses on hospitals, long term care services, nursing homes, lab fees, and other such expenses.
• Money used to buy prescription drugs, insulin, etc
• Money used to purchase contacts or eye glasses, false teeth, hearing aids, and other such necessary equipments.

These were pretty common ones, weren’t they? Now, let’s have a look at some of the uncommon ones (like her bedtime stories).

• Expenses incurred to avail acupuncture treatment
• Expenses incurred for alcohol, drug treatment, and related charges, but they must be prescribed
• Expenses incurred to take part in smoke cessation programs
• Expenses incurred to take part in programs like obesity treatment, or weight loss, or hypertension, etc.
• Expenses incurred to purchase wheelchair, crutches, pets for old and blinds, and for laser eye surgery
• Transportation expenses incurred while availing any of the above mentioned services.

Wow Grandma, that seems to be an awesome list. It would definitely save me lots this year. However, she always has her do’s and don’ts. There are few expenses that can you cannot include a medical expenses tax deductions.

• Expenses incurred on purchasing diet food or paying health club charges
• Funeral costs
• Expenses incurred on surgeries
• Expenses incurred to buy nicotine patches and gums without prescriptions

She has also mentioned how one can claim all these expenses. Before claiming, however, you need to add up the total amount of medical expenses tax deductions, and collect all the bills, statements, receipts, etc, which would be required as evidence. The amount must be mentioned in Schedule A of Form 1040. While filing the tax returns you need to get you bills along.

Thank you granny, I will send you a big surprise this Christmas.

As a rule of thumb, the custodial parent, the one with whom the child stays for the major part of the year and whom the child is dependent is the one who gets tax benefits. But sometimes, the child might also be considered a dependent of the non-custodial parent when the custodial parent has to give him/her the right to take charge of the child. During that period, the non-custodial parent gets the right to claim the tax privileges. You might ask what’s in this for the custodial parent. There’s nothing actually, but the custodial parent needs to release the right to guardianship under special circumstances, such as, completing settlements.

What are the criteria that a non-custodial parent must satisfy for taking custody of the child and claming the tax benefits?

• Provide half support for the child
  One or both parents should provide at least half the support required  by the child for the entire year
• Parents should be divorced or separated
  The parents of the child must be legally divorced or separated officially for about 6 months in the latter case.
• Custody of the child for more than a year
  The child should have been in the custody of one or both parents for more than a year.
• Official authorization of child custody
  The custodial parent should provide a written declaration authorizing the non-custodial parent to take charge of the child for the year. The easiest way to do this now is to fill the IRS 8332(Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent) which the non-custodial parent must furnish to the tax officials for claiming the tax perks.

What are the tax benefits that you can claim as a non-custodial parent?

• Dependency Exemption tax which is $3,650 for this year and the next. It varies for people of higher income group than that specified.
• A child tax credit of $1000.
• Student loan interest deduction of up to $2500
• Tuition fee deduction of $4000 for higher level courses
• Medical care costs

All these deductions vary for people in higher income groups. These deductions can also be claimed by the custodial parents. The non-custodial parent has to face constraints. They cannot claim all tax benefits. They can only claim some.

There are certain tax benefits that both parents can claim. Even a non custodial parent can claim healthcare tax benefits along with the custodial parent provided he/she satisfies certain conditions of being legally divorced and also extending support to the child.

Buy A Huge Sports Utility Vehicle

This might not appear very palatable for you, but buying a Sports Utility Vehicle can actually help you in saving up on taxes. If you have a lot of business transportation you can always buy this vehicle. You can use it. If its cost and maintenance were the only issues of concern to you, here’s some good news for you. SUV’s used about 50 % for business purposes are eligible for depreciation of $25,000. To get this depreciation, you should buy a vehicle with a GVWR (Gross Vehicle Weight Rating) of more than 6000 pounds. The GVWR of a vehicle is written on the driver’s door.  Read it up and then select a vehicle that meets the criterion. That must be a really heavy vehicle now, but the depreciation for smaller and lighter vehicles is much less.

To save up on taxes, though this option looks good, don’t buy a huge SUV with the sole purpose of saving up on taxes if it really has no utility for you or if you think you can’t maintain it. After all, even if you don’t use a vehicle you should be able to maintain it in good condition so that it fetches you a good resale value.

Business Equipment and Software

The Section 179 depreciation is not only on SUV’s but also on business equipment and software. You get$250,000 depreciation on them. You surely can buy some new computers, office furniture and software isn’t it? These, as a purchase option, are better than the SUV because there are more chances of their being put to some use. After all, computer machines and software become outdated quite often and you’ve got to keep replacing them with new material.

You get the $ 250,000 depreciation on heavy pick up vans too which do not officially qualify as SUVs.

Avail 50 Year Bonus Depreciation On

You can avail 50 year bonus depreciation on new office equipment according to the Section 179. If you got some parts of your office renovated, you could avail the bonus depreciation on that too. But not all real estate works qualify for that. Don’t wait till next year for availing these depreciations because the rules may change.

Delay Income and Accelerate Deductible Expenditures

If you are a running a sole proprietorship business, your income gets reflected in Form 1040. You can defer your income till next year and increase your deductible expenditures this year to be in the low tax category.

Look For Net Operating Loss Carryback

The first three strategies mentioned here are not only for availing the depreciations of Section 179 but also for showing a Net Operation Loss (NOL) for up to 5 years backwards and recovering any high amounts taxes that you might have paid earlier.

• As expected the home purchase deadline has been extended till the 30th of November next year for all the principal residences of the United States.. If on that date your purchase is in the middle of a deal you can expect your deadline to be relaxed for a couple of months from then.
• If you are an existing homeowner who bought a replacement of the US principle residence after the sixth of November this year, you qualify for the tax credit though it’s a reduced one.
• The first time home buyers as defined by the federation earlier still get huge credits- the much popular $8000 credit which you are already aware of.
• Even high income groups can avail the home buyer credits now. Earlier the upper income limit for availing this credit was pretty low but now the upper limit has been raised so that people with higher incomes can take part in the program. This comes as a relief to the higher income group. Earlier, the phase out range for unmarried individuals and married people who live separately has been $75,000 and $ 95, 000 respectively, but now, those who’ve made purchases after the 6th of November this year,  the phase out range has been lifted to $ 125,000 and $ 145,000  MAGI respectively. For married joint filers the phase out range has been raised from $150,000- $170,000 to $ 225,000 – $ 245,000 MAGI.
• For properties purchased after the 6th of November, their cost should be less than $800,000 for you to avail the tax credit.
• Children and dependents do not qualify for the credit for properties that are bought after the 6th of November this year. You should be at least 18 years old and should not be dependent on anyone for your finances. You should not be dependent as per the 1040 FORM when you purchase the property. This has been done to stop people from claming credits on the name of young buyers who are actually dependent on their parents for their monetary requirements. There are so many children today who are claiming credits for buying a lodge near their colleges.
• As in all businesses the tax credit program is seeing quite a lot of fraudulency when it comes to claiming the $8000 tax return. People who already own properties are fraudulently claiming the returns. For this reason, now you’ve to submit real estate documentation to substantiate your claim. When the government is giving returns even when you show no income why people should resort to fraudulency?
• The new law allows you to claim credits on your previous year’s returns. So you can claim on your 2008 returns this year and also for next year on your Form 1040 of this year. This allows you to get credits sooner than you can expect. Also if you have a higher income than at the time you purchased you still can claim the credit.