- Days left

WalletPop experts answer your tax questions on volunteer work, disability payments and more

Every April 15, news trucks park themselves at local post offices to interview the many who wait for the last minute to file their taxes. Don't waste your day waiting in those long lines. Get started now. To help, the IRS has posted tax tips for 2010. WalletPop experts are also here to answer your questions on volunteer work, IRA withdrawals and taxes on disability payments.

I perform volunteer work for my local county government. Are my expenses tax deductible; i.e., gas or mileage traveling to meetings and site visits, printer paper, printer ink, cartridges, etc.?
--Larry Bandelier

Answer from Bob Meighan, CPA and vice president of TurboTax
To deduct volunteer work, the organization must be recognized by the IRS as a tax exempt organization (like a 501c organization). Generally speaking, units of government, such as state departments or local government qualify. So while the joy of volunteering is rewarding in and of itself, it doesn't hurt that many of your expenses can be deducted on your tax return. Certainly, you'll want to track and deduct your out-of-pocket expenses such as the ones you mentioned and your mileage (at 14 cents per mile). Unfortunately, your time and expertise are not deductible. This is a great question, and we have tax and tech experts live on Twitter to help all season long @TeamTurboTax.

I sold 1.6 acres to my uncle for $20,000. The property was originally part of a 3.65-acre lot (that includes my current residence) which I received as a gift from my grandmother. In 2004, she divided the property, originally approximately 7 acres, between my mother and me. She and my grandfather inherited the property in 1967, part of a larger lot, when my great-grandfather died. How do I find the cost basis and FMV for the 1.6 acres I sold to my uncle?
--Jason Howell

Answer from Barbara Weltman of The J.K. Lasser Institute
For purposes of figuring gain on the sale of property received by gift, the basis generally is the basis in the hands of the person (called a "donor") who gave it to you. Often, this can be difficult to determine, because there may be no records of prior purchases or transactions. If the donor inherited the property, then the donor's basis is equal to the value of the property at the time of death of the person who bequeathed the property to the donor (although some adjustments to basis may apply). Unfortunately, it is up to a taxpayer to establish basis. If this cannot be done, then all the gain on the sale of the gifted property may be taxable.


Are there any provisions this year for income averaging? I have emptied my IRA trying to help my son keep his business going. To date, I have not recouped any of these funds. Is there any way to spread out the income taxes I am facing?

Answer from Bob Meighan of TurboTax

Income averaging went away back in 1986. For those of us old enough to remember this method for computing your taxable income, the tax was figured on the average of the total of current year's income and that of the three preceding years. It was advantageous to use this method when your income fluctuated significantly from year to year. By the way, emptying your IRA is a very expensive tax move, since you are likely to pay not only income taxes on the distributions, but also a 10% penalty. This really hurts. While there may be ways to mitigate the impact of the distributions by paying it back to the IRA, it sounds like you'd better be prepared to pay the tax come April 15. In some cases, you may be able to negotiate an installment payment plan with the IRS if you don't have the wherewithal to pay now.


I've been getting disability since May of last year. I was not aware I had to tell them to tax it, so no taxes have been taken out. My income for the year is $19,537.96. I have a son who is 17 and still in school. What happens in a case like this?

Answer from the J.K. Lasser Institute's Barbara Weltman
Disability benefits from Social Security are taxed in the same way as Social Security retirement benefits -- they can be fully tax free or included in income at 50% or 80% , depending on your overall tax picture. If you are single and your "provisional income" (your income increased by 50% of these disability benefits and any tax-free interest) is no more than $25,000, you won't owe any tax on the benefits. A $32,000 provisional income threshold applies to joint filers. Otherwise, you'll have to go through a computation to figure the taxable portion of benefits. If you find you're subject to tax for 2009 benefits, consider requesting income tax withholding on benefits in 2010.

Increase your money and finance knowledge from home

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

Economics 101

Intro to economics. But fun.

View Course »

TurboTax Articles

Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Add a Comment

*0 / 3000 Character Maximum