Sunday, July 31, 2011

Work-Related Driving - IRS Mileage Rate Tax Deduction

What is the IRS mileage rate:
The IRS mileage rate, also known as the standard mileage rate the IRS is an amount that the federal government lets you deduct for each mile you drive or work for commercial purposes. The IRS mileage rate provides an alternative method to calculate the deduction for car expenses when you use in your business or your employer. In a recent fiscal year, the IRS mileage rate allows taxpayers to deduct 50 cents for each mile traveled. So if your employer requires you to use a personal vehicle as part of its work and will not be reimbursed using the IRS mileage rate only allows you to keep track of the miles that the work unit and multiply the total by the end of the year the mileage rate to reach your deductible expense car.

Alternative to the IRS mileage rate:
If you decide not to calculate your deduction for car expenses with the IRS mileage rate, you must use your actual car expenses to calculate your deduction. This includes the lease payments, car insurance, repairs, gasoline and oil, and any other costs associated with your vehicle. However, calculating the actual cost is more efficient for companies that use the vehicle exclusively for business. But if you are an employee who uses a car for both personal and business purposes, you must assign actual costs for each type of use and the costs of staff car are not tax deductible. For example, if you put 10,000 miles on the car during the year and 6,500 of them relate to your job, then you can not take a tax deduction equal to 65 percent of its actual costs. You can, however, calculate the deductions using the IRS mileage rate and use the method that produces the greater deduction.

Reports IRS mileage rate deductions:
If you claim a deduction for the miles of work you put in your car, you must report as an expense related to working with your other itemized deductions in Schedule A and attach it to your Form 1040. However, if you claim the mileage rate as a business expense, to submit a report on the tax form used to report your business income and deductions such as Schedule C, Form 1120 or 1120A.

Sunday, July 24, 2011

Financial Tips when Moving Abroad

Do Your Homework. You need to plan ahead when deciding on moving abroad. First, you must have employment that can sustain you financially at par with the standard of living in the country of choice. Secondly, you need to calculate your living expenses, especially the basic necessities. These basic necessities include renting a home or apartment, food costs, communication costs as well as transportation. Thirdly, you need to find out opportunities in the country for yourself and your family. These may include an expat community, schools and other amenities where you can enjoy the country in peace and prosperity.

  • Fulfill Obligations in the Home Country. These obligations in the home country would be all debts and other payables you would be leaving as you start your life in another country. Should you fail to pay in any of these, being a continuously connected world, your debt as well as your financial standing would be affected wherever you go.

  • Understand Taxability. Unless you have renounced your citizenship, the tax requirement to be paid still attaches to an individual. Thus, wherever one is in the world, the tax responsibility still has to be paid. One needs to find out the tax payable and determine the manner of payment that can be made wherever they may be in the world. One of the ways to save money overseas is finding out if there are tax exemptions available to expats of a given country because of tax agreements and exemptions.

  • Finding your Place. When making a decision on living overseas, you need to find your place in the sun. This means you would find a roof over your head and a place where all your choice amenities are available and within easy reach. What is more important though is finding a place where the cost of living is within your means and income. You need to compute for the costs required to have a comfortable life in the place that you have chosen.

  • Coordinating Movements. Since you are a foreigner in another country, you need to coordinate all activities and movements with your embassy. This not only ensures security but also financial stability as you can readily find means of assistance with your consular officials. This would save a lot of money and stress knowing that you have a means to leave the country safely should the need arise.

    As can be seen, being abroad is a big decision that affects not only the personal life but also your financial life. Before you do move abroad, you need to do your homework, pay all your obligations at home, use taxability rules to your advantage, find the right place for you and coordinate your movements while in the host country. Once you have all of these down pat, you would be able to move abroad as an expat and live your life comfortably.

    For a more comprehensive discussion on moving abroad, do visit us at Indian Expats Choose Home over EU and US for Investment please visit the author’s site The NRI Community

Saturday, July 16, 2011

Safe Relief From Your Debt

In these difficult financial times, it is easy to get caught in the quagmire of credit cards and other debts. You owe money on your car, at home, traders and anyone who will take a dollar. 

This is a country of spendthrifts, and occasionally, you get in over your head. However, you can delete both the secured and unsecured debt. Below I have mentioned both secured and unsecured debt and how to get rid of these kind of debt, easily and steadily. If you follow these steps, you can get out of it easily.


Secured Debt:

When it comes to secured debt, fewer avenues available. You can try to negotiate with the lender to lower your interest rate or extend the loan, but is under no obligation to do so. In fact, predatory lenders can count on you to get behind as a way to take your property and sell it for profit.

If you are working with lenders has not worked, the other option is bankruptcy. If the Chapter 11 or 13 years, the goal is to eliminate your debt cleaned and given a fresh start. You may lose some property in the offer - and bear in mind that in most cases, bankruptcy does not provide tax relief or debt student loan - but will reduce its debt significantly. Bankruptcy should be the last option because it severely hurt their credit score and be on your credit report for seven to 10 years.

Unsecured debt:

The unsecured debt is that due to collection agencies, in medical bills, credit cards and anything else that is not a loan structured. You can go directly to the creditors and discuss your debt. Agencies credit card are often willing to settle for less than they should be - called a charge-off - but your score will be a success. The hospitals have programs that you can forgive the charges based on income and other factors. Collection agencies only want your money.

The other route is a credit counseling agency certified, which will contact your creditors and negotiate lower balances and interest-free and establish a monthly payment. The goal is usually to be debt free in three to five years. One must be careful with credit counseling agencies that charge high fees and negotiate lower payments from your creditors.

Tuesday, July 12, 2011

Is It Possible To Get Rid Off Debt Without Debt Consolidation?

Paying off debt is not the only solution for personal debt consolidation. In fact, it can have dangerous side effects. If you consolidate your consumer debts into one loan and can not pay off your payments, you might lose your home, or it could drag you to insolvency. Instead, using a debt "snowball" approach, you can implement your plan to pay the debt and experience success sooner rather than later. And it is not that difficult, most people pay off their consumer debt in two years.

Add up your income after taxes for the last three months of pay stubs.

Add up all the costs of their checking account statements and comparing the sum with the sum of their pay stubs.

Make sure your income is greater than your expenses during the period of three months. If they are older, you must add the difference of the amount to be determined, then to make significant progress in debt.

List your debts, excluding your mortgage, on a sheet of lined paper from the smallest to the largest debt. Beside each debt, list the minimum required payment for each.

Identify spending cuts equal to at least $ 100 per month or more. Note that these spending cuts are temporary and can be reset if you want after your debts are paid.

Add the additional amount that has been created through spending cuts to the minimum payment on the smallest debt on your list, and pay that amount to the debt each month until fully paid. Make minimum payments on other debts only.

Apply both the extra amount you have created through spending cuts and the minimum payment on the debt smaller than the minimum payment on the next debt on the list until it is well paid off.

Work your way through each debt on your list this same way, adding your minimum payment before the payment of its growth "snowball" until the last non-mortgage debt is paid.

Consider using their freedom to create cash for an emergency fund and increase your savings for retirement.