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Top 10 Halloween Season Tax Tips

Halloween is one of my favorite holidays. I always look forward to my law firm’s annual celebration. However, there is more to Halloween than costumes and trick-or-treating. The end of the year is only a few weeks away, and Halloween season is a good time to start thinking about taxes. To help my readers save a little money this year, I have put together ten spooky Halloween tax tips.

1. Haunted Home Renovations

Before you have guests over for a Halloween party, you might want to consider making some green renovations to save on energy. By installing a programmable thermostat, or upgrading to dual pane windows, you can keep your guests comfortable and also qualify for an Energy Star tax incentive. For more information, check out EnergyStar.gov.

2. Spooky Soiree's

Most teachers try to throw Halloween parties for their students, but due to budget cuts many educators are forced to finance these events out of their own pockets. Fortunately, if you are a qualifying teacher then you can use these expenses as part of your educator expense deduction.

3. Supernatural Savings

The average consumer spends about $66 each year on Halloween decorations, costumes and candy. Unfortunately, if you visit your local party supply store then you may end up paying more then you need to for your Halloween supplies. Instead, check out deals online to make your money stretch.

4. Eerie Extensions

If you had to file a tax return extension in 2009, then October 15th was the deadline to get your return in. The longer you wait to file your return, the more you will have to pay in IRS late penalties. If you have not yet competed your return, I highly recommend calling a tax professional right away.

5. Chilling Charity

As the weather cools down in October, charities begin asking for cool weather donations. When you have some free time, go through your winter wardrobe with your family to see if you have any extra sweaters, or blankets to donate. Keep the receipt for your contributions, and you can deduct the donation on your next tax return. However, you will need to itemize your return to qualify for this specific tax incentive. For more information, you can read this article explaining the charitable contribution deduction on RDTC.com.

6. Tip or Treat

If you receive tips at your job, then the IRS requires that you keep track of your total tips and report them to your employer. According to Topic 761, if you get $20 or more in tips during a calendar month then you are required to report them to your employer by the 10th of the following month.

7. Witchy Work Party

Throwing a Halloween party at the office is not only great for moral, but also comes with a nice little tax deduction. Food and supplies purchased for your employees can usually be written off if the party is held on the premises. If you plan a dinner or get together at a nearby restaurant then you can deduct half of the expense.

8. Dastardly Deadlines

Since every taxpayer is not required to make estimated quarterly tax payments, it can be easy to forget about the deadlines. Unfortunately, September 15th was a payment due date, and if you did not remember to send in your check then you should try to do so as soon as possible to avoid excessive penalties.

9. Franken-Farming

October is a busy month for many farmers. Luckily, there are several ways for taxpayers who own farms to save on their taxes. Hiring family members or depreciating capital farm assets are both tax savvy moves to make. For more information, you can read IRS Publication 225, Farmer’s Tax Guide.

10. Creepy Calculating

Like it or not, Halloween means that there are only two months left in the year. It is a good idea to think about calculating your tax liability so that you get a head start on end of the year tax planning. If you are looking for ways to prevent owing the IRS a large payment, then check out this article on RDTC.com with advice on how to lower your tax liability.

President Obama Signs $10b of International Tax Increases

According to the Tax Prof Blog, President Obama signed H.R. 1586 into law yesterday. The legislation creates a “$10 billion fund to prevent teacher layoffs and provide a temporary increase in the Federal Medical Assistance Percentage, funded with corporate international tax changes.”

You can find more information on the new law through the official links below:

White House.gov: Another Step Towards Sustainable Recovery

Technical Explanation of the Revenue Provisions of the Senate Amendment to the House Amendment to the Senate Amendment to H.R. 1586 (JCX-46-10)

Joint Committee on Taxation, Estimated Revenue Effects

Bloomberg Moves to Block Teachers’ Raises

From The NY Times.com:

After warning of widespread teacher layoffs for months, Mayor Michael R. Bloomberg announced Wednesday morning that the city would eliminate planned raises for all of its public-school teachers and principals for the next two years, which he said would “save the jobs of some 4,400 teachers.”

“This was not an ideal decision and it certainly does not solve all our budget issues,” Mr. Bloomberg said in a statement, which was released after he notified Michael Mulgrew, the president of the United Federation of Teachers, about his decision. “In our conversation this morning, Michael Mulgrew and I agreed that we would go together to Albany and Washington to press our case to restore more education funding.”

The mayor’s statement portrayed the decision as final, but in his own statement, Mr. Mulgrew said that the mayor did not have the power to take such a step. The union’s contract with the city expired in October, and negotiations over the current contract are at an impasse.

“He does not have the power to unilaterally decide on the teachers’ contract, and we have reached no agreement on his proposal to freeze teacher pay,” Mr. Mulgrew said.

The head of the principals’ union implied that he, too, would contest the move. “We have not consented to his proposal to eliminate raises for the next two years, and we have yet to sit down at the bargaining table,” said Ernest Logan, the president of the Council of School Supervisors and Administrators.

Tax Tips for Teachers

Summer break is—unfortunately—winding down for students and teachers alike. While teachers all over the country will soon start planning their lessons, this is also the prime time to get your tax files in order. Teachers are in a great position to reduce their tax burden, but it takes time, effort and some thought.

Like anyone else, the best way for teachers to save money on their taxes is to get educated and get organized. If you know what tax breaks you are entitled to, you can actually claim them. And if you have all your tax documentation organized, you’ll be able to prove that you are entitled to each credit, deduction and exemption.

Teachers in particular have a great way to save money on their taxes: the Educator Expenses Deduction. The IRS recognizes that teachers often spend their own money on classroom supplies. Therefore, this deduction is good for up to $250 every year ($500 if your spouse is also a teacher and you file jointly).

While you do not have to itemize deductions to get this deduction, you do have to be organized. Too many teachers keep sloppy records, then can not find their receipts. To help you get organized, here is what I recommend. Create a file labeled “Classroom Expenses”. Keep the file handy so it is easier to properly file receipts than to throw them on the counter. You can go a step further and attach your receipts to a piece of paper with the purpose of the expense written in. You probably will not remember that you spent $5.89 on pencils for your classroom 9 months from now and some receipts are a little difficult to read. This extra step can save you a lot of squinting at receipt tape come tax season.

If you get your system in order now, you will be all set to file your receipts when you go shopping for supplies next month.

IRS Clarifies: New Rule Will Not Punish Teachers

The IRS recently put out a release to clear up some ongoing confusion about the effects of a recent law change to the IRS’s deferred-compensation rules. They reassured teachers and other school employees that new deferred-compensation rules will not affect the way their pay is taxed during the upcoming school year. Under the law teachers and other employees are given an annualization election – meaning they are allowed to choose between being paid only during the school year and being paid over a 12-month period. Therefore if they choose the 12-month period, they are deferring part of their income from one year to the next. However, the IRS clarified that the new rules will not be applied to annualization elections for school years beginning before Jan. 1, 2008, so school districts and teachers will have time to make any changes that are needed.