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TWC is often asked if taxpayers can deduct those pesky custodial fees that are imposed on many IRA accounts. It is a frequent question and it seems that taxpayers really want to deduct those fees in a big way. The answer is a qualified Yes. Except that the CONgress has set up lots of hoops for you to jump through before you can benefit from writing off that measly $35.00.
Most importantly, if the fee is deducted directly from the account there is no deduction. You must pay it separately.
So you wrote a check to Merrill Lynch for the IRA fees, but that still doesn't buy you much because you can't deduct the expense unless you itemize your deductions on Schedule A.
Since it turns out that you have a fat mortgage and a ton of property taxes to deduct, you also want to include and deduct the IRA custodial fees. But wait! The fees are considered Other Deductions, like tax prep fees and safe deposit boxes, and are subject to a floor that is essentially two percent of your overall income.
In English, that means that when all those other deductions are added together they have to total more than two percent of your overall income (AGI) before you get one thin dime of tax savings.
Got a few alarmed emails this AM about the post right below this one. After I re-read my cryptic dedication to a couple of different crazy chicks I've known, I added a line that might help clarify the meaning. Goes like this:
No, Babe, I won't be there to catch you when you fall, again.
Saving people from themselves is exhausting, thankless, tiresome work and the suicide ward is a vast arena of despair, more likely to induce another try for a short trip to the other side than to instill hope for a better life. The clientèle don't help much neither.
In the end, I just mean that I knew that girl Toad is singing about. Something was always wrong. Still is.
Hard to believe this tune is older than my boy. Hard to believe that MTV once played music videos. Thought these guys were a new band, but they've broken up. Long time back.
I knew that girl. Those girls. Pretty well. That's why I know what color they paint the walls in the Looney Bin and that the thick glass windows have embedded wire. No, Babe, I won't be there to catch you when you fall, again. Just a fading bad dream anymore.
Chinese snow storms strand 200,000 at station in new year exodus.
Driving sleet, freezing temperatures and a blanket of snow across southern
China have paralysed trains and aircraft, stranding tens of millions of
people trying to get home for the biggest holiday in the Chinese calendar.
As an employer you may reimburse your employees who drive personal vehicles for business reasons up to the IRS standard rate. Anything above the standard mileage rate is required to be reported to IRS.
As an employee you may deduct up to 50.5 cents per mile of business travel that you were not reimbursed for.
In either case, to fly in an audit there must be adequate records. Employers will need an expense report from the employee documenting the miles driven. Easy enough to do with
modern day planners and PDA's.
BTW, commuting is not business miles unless you are a construction worker.
A philosophy professor stood quietly before his class with some items laid out on the desk in front of
When the class began, he picked up a very large and very empty mayonnaise
jar and proceeded wordlessly to fill it with golf balls. He then asked the
students if the jar was full. They agreed that it was.
The professor then picked up a box of pebbles and poured them into the jar.
He shook the jar lightly. The pebbles rolled into the open areas between the
golf balls. He then asked the students again if the jar was full. They agreed it
was, though more reluctantly.
The professor next picked up a box of sand and poured it into the jar. Of
course, the sand filled up everything else. He asked once more if the jar
was full. The students,having figured out the joke, responded with a
The professor then produced two glasses of wine from under the table and
poured the entire contents into the jar, effectively filling the empty space
between the sand.
The students laughed.
As the laughter subsided, the professor said I want you to
recognize that this jar represents your life. The golf balls are the
important things; your family, your children, your health, your friends,
and your favorite passions; things that if everything else was lost and
only they remained, your life would still be full.
The pebbles are the other things that matter like your job, your house, and
your car. The sand is everything else; the small stuff. If you put the sand
into the jar first there is no room for the pebbles or the
golf balls. The same goes for life. If you spend all your time and energy on
the small stuff, you will never have room for the things that are important
to you. Pay attention to the things that are critical to your happiness; get
the golf balls in first. Play with your children. Take time to get medical
checkups. Take the love of your life out to dinner. Play another 18 holes. Do one more run
down the ski slope. There will always be time to clean the house and fix the
garbage disposal. Set your priorities. The rest is just sand.
One of the students raised her hand and inquired what the wine represented.
The professor quietly smiled.....
I'm glad you asked. It just goes to show you that no
matter how full your life may seem, there's always room for a couple of
glasses of wine with a friend.
At one time saavy winos knew that Liberty School was a knock off. Whenever Caymus wasn't good enough to be bottled as Caymus it was sold off and bottled as Liberty School. A well-kept secret and one that gave wine drinkers the chance to sample an almost great wine for the price of ordinary.
Sadly those days are history and Liberty School is just another face in the crowd. It's not bad, but really, no better than Mondavi's 1.5 liter bottle of Woodbridge Cabernet. Ten bucks at Costco or Sams.
IRS stats show that two thirds of all individual taxpayers claim the standard deduction rather than itemizing deductions on Schedule A.
It works like this: The government gives you a certain amount as a deduction against your taxable income simply for breathing. This so-called Standard Deduction is meant to partially equalize the tax bite on those who rent with those who own and deduct mortgage interest, property taxes, and the like. If you have more deductible expense than the standard deduction amount, then you get to deduct the excess. It is a crude but reasonably effective method.
The deduction amounts are higher in 2008. The exact amount depends on your filing status, whether you're 65 or older, blind, or if an exemption can be claimed for you by another taxpayer.
Single - $5,450
Married filing separately - $5,450
Head of household - $8,000
Married taxpayers filing jointly / qualifying widow(er)s - $10,900
Married taxpayers filing separately - $5,450
If you are over 65 add an additional $1,050 for married filers and $1,350 for single and head of household filers. Married filers older than 65 and blind add $1,050 x two, single filers older than 65 and blind and $1,350 x two.