The state sales tax break gives itemizers the chance to either deduct state income or state sales taxes paid. This benefit is great if you live in a state without income taxes. For more information Visit our Office or Ask to our Accountants.
PAY BACK YOUR 401(K)
Pay back a 401(k) loan before the end of the year or before leaving the job. Failing to do so means the loan amount will be considered a distribution that will be taxed in your top bracket and, if you’re younger than 55 in the year you leave your job, hit with a 10% penalty, too. For more information Visit our Office or Ask to our Accountants.
When calculating the cost basis after selling a financial asset, make sure to add in all of the reinvested dividends. That increases the cost basis and reduces your capital gain when you sell the investment. For more information Visit our Office or Ask to our Accountants.
Charitable deductions made with payroll deduction (such as the United Way), checks, cash and donations of goods and clothing are all deductible. These deductions add up and are often overlooked. Don’t forget to include the cash you give to the Salvation Army and the amount you place in the collection plate at church each week. Also if you plan to make a significant gift to charity, consider giving appreciated stocks or mutual fund shares that you’ve owned for more than one year instead of cash. Doing so supercharges the saving power of your generosity. Your charitable contribution deduction is the fair market value of the securities on the date of the gift, not the amount you paid for the asset, and you never have to pay tax on the profit. However, don’t donate stocks or fund shares that lost money. You’d be better off selling the asset, claiming the loss on your taxes, and donating cash to the charity. For more information For more information Visit our Office or Ask to our Accountants.
STUDENT LOANS INTEREST
If you are an adult child who is not claimed as a dependent by your parents, here is a possible tax break for you. If your parents pay back your student loans, the IRS assumes the money was given to the child, who then repaid the debt. Thus the young adult child can deduct up to $2,500 of student loan interest paid by his or her parents. For more information Visit our Office or Ask to our Accountants.
MOVING EXPENSES DEDUCTION
Keep track of the cost of moving to a new job. If the new job is at least 50 miles farther from your old home than your old job was, you can deduct the cost of the move even if you don’t itemize expenses. If it’s your first job, the mileage test is met if the new job is at least 50 miles away from your old home. You can deduct the cost of moving yourself and your belongings. If you drive your own car, you can deduct your mile for moving, plus parking and tolls. For more information Visit our Office or Ask to our Accountants.
UNREIMBURSED VEHICLE EXPENSES
Unreimbursed vehicle expenses are another frequently overlooked tax break. You can’t deduct commuting costs, but if you travel to satellite offices or drive your own vehicle for business and aren’t reimbursed, you can deduct mileage costs. For more information Visit our Office or Ask to our Accountants.
RETIREMENT ACCOUNT CONTRIBUTIONS
Retirement account contributions are a top tax-reduction tool, as they serve two purposes. Most contributions (except the Roth individual retirement account) allow you to deduct from your taxable income the amount paid into the retirement account. This reduces your total taxable income. These funds also grow tax-free until retirement. If you start early, this strategy alone can secure your retirement. For more information Visit our Office or Ask to our Accountants.
SELF-EMPLOYED INDIVIDUALS DEDUCTIONS
Self-employed individuals (either full time or part time) are eligible for scores of tax deductions. A few of those expenses include business-related vehicle mileage, shipping, advertising, website fees, percent of home Internet charges used for business, professional publications, dues, memberships, business-related travel, office supplies and any expenses incurred to run your business.
Also Self-employed individuals who pay 100 percent of their Social Security taxes owed (15.3 percent) can deduct 50 percent of the taxes paid. You don’t even need to itemize to claim this tax deduction. For more information Visit our Office or Ask to our Accountants.
COMBINE A VACATION WITH A BUSINESS TRIP
Combine a vacation with a business trip, and reduce vacation costs by deducting the percent of the unreimbursed expenses spent on business from the total costs. This could include airfare and part of your hotel bill (proportionate to time spent on business activities). For more information Visit our Office or Ask to our Accountants.
CONTRIBUTE TO A HEALTH SAVINGS ACCOUNT
Contribute to a health savings account if you have a high-deductible medical plan. The contributions unused for medical expenses can roll over indefinitely and grow tax-free (similar to the assets in a retirement account). For more information Visit our Office or Ask to our Accountants.
SELF-EMPLOYED HEALTH INSURANCE DEDUCTION
If you are self-employed, the IRS wants you to know about a tax deduction generally available to people who are self-employed.
The deduction is for medical, dental or long-term care insurance premiums that self-employed people often pay for themselves, their spouse and their dependents. For more information Visit our Office or Ask to our Accountants.
IF YOU WORK FOR YOURSELF OR HAVE A SIDE BUSINESS
If you work for yourself or have a side business, don’t be afraid to take the home office deduction. This allows you to deduct the percent of your home that is used for your business (on Schedule C, 1040). If the guest bedroom is used exclusively as a home office, and it constitutes one-fifth of your apartment’s living space, you can deduct one-fifth of rent and utility fees for your home office. For more information Visit our Office or Ask to our Accountants.