Category: tax deductions

The federal income tax deduction is a statutory requirement under the American laws. It has to be paid by all American citizens who fall under the tax bracket as decided by the American government. Taxable income is calculated by removing (a) excluded income, (b) exemptions, and (c) permissible deductions from the individual s gross income.

The following are the heads under which you can avail the tax deduction:

1. Exemptions: Some common exclusions from gross incomes are:
i) Earnings made from life insurance contracts
ii) Earnings made from gifts and inheritances
iii) Proceeds granted for personal injuries
iv) Interest received from state and municipal bonds

It must however be noted that all of the above exemptions are subject to certain conditions, and thus a tax adviser s help must be taken while availing these exemptions.

Keywords: Tax Deductions, Tax Savings, Tax Planning

If you qualify as a family daycare provider then you can claim deduction on expenses made on providing meals and snacks. If you have employees, you can deduct 100% of their food cost as expense, provided that their salary does not include a food component. If you provide snacks and meals to your wards then to claim deductions you need to maintain records of consumption and show them to be exclusively for the daycare centre. Since your own household is fed from the same kitchen it may be a difficult process to follow. It is advisable therefore to show the standard rate for meals and snacks as expense, and claim deduction.

Standard rates are applicable per person for breakfast, lunch dinner and three snacks per day. These rates include beverages but not non-food material that may be needed to prepare or serve the food. Such utilities, however, can be shown as a separate expense.

So while daycare can be a taxing business, a little care could make sure that the taxes don t make you feel so. Plan ahead and you could take care of it all!

Keywords: Tax Deductions, Tax Savings, Tax Planning