Tax Themed Mothers Day Gifts

Mother’s Day is less than a week away, and it is one of my favorite days of the year. My mom sacrificed a lot for my brothers and I and I am grateful for all the life skills and lessons she taught me. To help the readers of my blog who are looking for ideas on how to show appreciation for their own mothers, I have put together the following list of tax themed gifts for moms.

Flowers with a Twist

Roses and flowers always make for good Mother’s Day gift, but in addition to visiting your local florist you could stop by a local office supply store to give a tax themed to gift. The April 15th deadline was only a few weeks ago so why not give your mother a new set of folders to store her tax documents or a calculator to check her withholdings. You may not think about an office supply store when you are doing your mothers day shopping, but these types of presents are great for the finance savvy mom, and will last longer than a bouquet of flowers.

Donation to Breast Cancer Research

Instead of buying your mother a gift that will only last a few weeks, she might appreciate a donation on her behalf to a charitable cause. If you are looking for a good place to make a contribution, I highly recommend the Susan G. Komen for the Cure Foundation. You can make a donation online, and print out a copy of your receipt to include in a Mother’s Day card. Then, next tax season your mother can claim the charitable contribution on her federal return.

Tax Planning and Advice Books

There is no better tax themed gift to give someone than a tax planning or advice book. You can purchase a copy of my book – The Tax Lady's Guide to Beating the IRS and Saving Big Bucks on Your Taxes – on Amazon.com. Or check out this link of dozens of other tax advice books and guides.

Gift Card for Energy Efficient Upgrades

By purchasing a gift card for your mother at a home repair store such as Lowes or Home Depot, you can basically give her a tax credit for next year. Just tell her to use the gift cards to purchase qualifying energy efficient upgrades to her home and save the receipts for next tax season. If you want to get creative, you could even print out pictures of qualifying appliances to include in a Mother’s Day card. For more information on what upgrades qualify for the federal incentives, take a look at the page on Energy Star.gov.

Dinner at a Local Charity Gala

When you attend a charity dinner you can claim a charitable deduction for the price you paid for the ticket, minus the value of the food you are served. For example, if you paid $200 per ticket to take your mother to a local charity gala, but were served meals with an approximate value of $50 each, then you – or your mom – could claim a total of $300 as a charitable contribution deduction next year ($200x2 - $50x2 = $300).

New Hybrid or Electric Vehicle

If you are looking to spend a hefty chunk of change on your Mother this year, then consider buying her a new hybrid or electric vehicle. The 2010 Ford Fusion Hybrid qualifies for a $3,400 credit, and there are plenty of other credits for electric vehicles.

Start Saving for her Grandchild's Education

If your mother is looking forward to seeing her grandchildren graduate from a decent college, then you could show her your commitment to saving for their education by opening up a 529 College Savings Plan. Although contributions are not exempt from income taxes, all withdrawals are tax free, meaning that you will not have to pay taxes on the interest that accumulates in the account.

Questions for the Tax Lady: December 7th, 2009

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: My boss usually gives me a present for the holidays, but this year she gave me a bonus check. Will I need to include these funds on my next tax return?

Yes, any cash gifts or items that are “easily exchangeable” for cash that you are given by an employer should be reported to the IRS. However, since your employer printed you out a check then odds are that she intends to include it on your W-2 form, but if you want to be extra cautious then you can always ask her. For more information on the tax implications of holiday presents from employers check out this entry on the RDTC Tax Help Blog.

Question #2: What is the 2009 standard deduction amount?

According to this IRS press release, for the 2009 tax year “the new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.”

Holiday Gift Ideas: Money-Themed Presents

This year, instead of giving gifts that your friends and family will only use a short time, David McPherson of ABC News.com is encouraging readers to give money-themed presents. These types of gifts can both encourage recipients to make smarter decisions about money, and some might even help lower their tax liabilities. Check out a few of their ideas below, of find the full article at ABC News.com.

1. Roth IRA: If you have a child now making money on their own, then consider setting up a Roth IRA in their name and funding it with an initial contribution. Then let decades of tax-free compounding go to work. The Roth IRA allows for tax-free withdrawals in retirement, and its advantages are greatest for the young.

2. Books: After a Roth IRA, the money-related gift that offers the highest potential rate of return is a book that teaches good personal finance habits early in life. The book that triggered my interest in personal finance shortly after I got married was "Making the Most of Your Money" by Newsweek columnist Jane Bryant Quinn.

3. Subscriptions: Worried that a 700-page tome on investing or personal finance might go over as big as a tacky Santa sweater? Then consider giving a one-year subscription to a personal finance magazine or maybe the Wall Street Journal, which offers a mix of day-to-day market coverage along with in-depth stories and columns on individual investing and other personal finance topics.

4. Financial planning gift certificate: Is somebody important to you in need of individualized financial help? Then consider paying for a few hours of time with a fee-only financial planner willing to work with clients on an hourly basis. Many of these planners offer gift certificates on their Web sites, and if you don't see one, ask.

5. 529 plan: Thinking about buying a savings bond for Junior's college fund? I say forget it, and instead help fund a 529 college savings plan. U.S. savings bonds are more trouble than they're worth with a long list of peculiar rules.

Holiday Gift Advice for Employers and Employees

Last week the Roni Deutch Tax Center – Tax Help Blog posted a season entry with holiday gift advice for employers and employees. Since there is so much confusion over presents and holiday bonuses from employers I wanted to make sure and share this informative article with my readers. You can find a snippet of the entry below, or checkout the full text at the Roni Deutch Tax Center – Tax Help Blog.

Seasonal Presents for Employees

As the holiday season swings into full force, it has become very common for employers to give out presents to their employees. For the most part, employees will not have to worry about claiming the value of these gifts on their tax returns unless it is a cash bonus. Additionally, employers can write off these expenses if they meet certain restrictions.

The Intent of Giving

In the case of Duberstein v. United States, the Supreme Court determined that the common law understanding of the term "gift," is different than the business tax related definition. The court found that some gifts given by employers were often intended to reward past performances or serve as incentives for future performance. In order to be excluded from payroll taxes a gift given by an employer must be made generously with "respect, admiration, charity or like impulses."

De Minimis Fringe Benefits

According to the Internal Revenue Code Section 132(e)(1), a de minimis fringe benefit is "any property or service the value of which is so small as to make accounting for it unreasonable or administratively impracticable after taking into account the frequency with which similar fringes are provided by the employer to the employer's employees." In plain English, a de minimis benefit is a gift given by an employer that is not subject to payroll taxes and is a deductible business expense.

Turkey, Ham, or Gift Basket Rule

You may have heard of the turkey, ham, or gift basket rule when it comes to taxes on employer provided presents. Essentially, non-cash holiday gifts of property given to an employee will not need to be considered part of an employees wages and will therefore not be subject to payroll taxes. The Federal tax code even allow for items such as flowers, books, gift baskets, etc. to be given to employees. The IRS asserts however, that these gifts must be of a "low fair market value," but does not provide any clear rules on what that monetary limit is.

Continued at RDTC.com…