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    spitvenom's Avatar
    spitvenom Posts: 1,266, Reputation: 373
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    #1

    Feb 9, 2010, 08:39 AM
    I don't understand deductibles
    If I owe 1200 in taxes. But I donated my car and they(The purple Heart) sold it for 1500 and I bought a new car and can write of the 1200 I paid in taxes shouldn't that pretty much take care of the 1200 I am suppose to pay out?
    smoothy's Avatar
    smoothy Posts: 25,490, Reputation: 2853
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    #2

    Feb 9, 2010, 08:55 AM
    Doesn't work exactly like that.

    Your deductible donation is only a percentage of the real value. Its not one for one. And you can really only do that when you itemize. Don't remember what the actual percentage is off the top of my head.

    But while your Deduction was valued at the price they actually sold it for (new regulations) your actual reduction of your tax obligations will not be for that number, but a fraction of it.
    spitvenom's Avatar
    spitvenom Posts: 1,266, Reputation: 373
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    #3

    Feb 9, 2010, 09:00 AM

    Well that sucks, But thanks for the answer!
    smoothy's Avatar
    smoothy Posts: 25,490, Reputation: 2853
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    #4

    Feb 9, 2010, 09:12 AM
    Quote Originally Posted by spitvenom View Post
    Well that sucks, But thanks for the answer!
    It can still help a great deal if you are not far into the next higher tax bracket... in combination it can help drop your taxible income to a lower bracket. So its really not as hopeless as it first appears, it is a useful tool. Assuming you have enough to use the long form.
    spitvenom's Avatar
    spitvenom Posts: 1,266, Reputation: 373
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    #5

    Feb 9, 2010, 09:32 AM

    What can be used on the long form? Taxes were much simpler when I just had a 1040EZ.
    smoothy's Avatar
    smoothy Posts: 25,490, Reputation: 2853
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    #6

    Feb 9, 2010, 10:21 AM

    Mortgage... charitible deductions.. certain work required expenditures,. actually that list is pretty long. And it varies a bit year to year. I hire a CPA that takes classes annually as to what deduction are allowed that year, how much, etc. But to really use the long form to save money you really need to have ENOUGH. Usually if you own a house that puts you to that level.

    True it's a LOT more complicated than a 1040EZ... but that's what I pay him for... that and his knowledge about what can be deducted year to year... and his advice about what I can claim if I choose to do during the next year. While not every tax person will know everything about everything... in general they do know a lot more about what you can and can't do than the average person who does only their own forms every year... and as a result claims less than they are entitled to claim costing them more money in the long run.
    spitvenom's Avatar
    spitvenom Posts: 1,266, Reputation: 373
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    #7

    Feb 9, 2010, 10:52 AM

    Man I don't think sometimes, my wife's best friends husband is a CPA and he always offers to help us out. Think I will have to take him up on that this year. Thanks Smoothy!!
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