Don’t Overlook Last-Minute Deductions

paperwork-1538658-1279x852(1)Wrap the year up right by getting a jump on tax day planning

Part 4 of 4

By now, you’ve become familiar with some tax breaks that you hadn’t thought of before. In part 4 of this series, we’ll take a look at even more tax breaks. 

As with any tax matter, it’s best to check with a licensed tax professional with any questions regarding your eligibility for a specific tax deduction. 

1. Accounting and tax prep fees: If you paid for tax prep software or paid a tax pro to prepare and file your taxes, you can deduct any fees associated with that service. 

You may also deduct any fees associated with representation during an IRS audit or for any other tax-related matter. 

You would list these fees under “miscellaneous deductions” on  the Schedule A attachment for your federal tax return. 

2. Substance abuse treatment: These costs can be deducted under the “medical and dental expense” portion of schedule A. 

3. Legal fees connected to alimony: While you can’t deduct all of the legal fees associated with divorce, you can deduct the portion of legal fees that were associated with either receiving or paying alimony. 

4.  Mortgage prepayment penalties and late fees: If you paid off your mortgage early and were hit with a prepayment penalty, you can deduct that penalty under the “mortgage interest” portion of Schedule A. 

If you made any late mortgage payments, you can also deduct your late payment penalties under “mortgage interest. 

5. Personal liability insurance: If you must carry personal liability insurance as part of your employment or business, you can deduct any premium costs that are not reimbursed by your employer. 

As with any tax matter, it’s best to check with a licensed tax pro regarding your unique tax scenario. You’ll need to meet certain income percentage guidelines to claim most of the deductions mentioned in this series. 

Getting an early start to end of year tax planning will save you time and headaches in the long run.

If you will be claiming any itemized deductions for the tax year, be sure to keep any receipts or records connected with your deduction(s).

You’ll need them to prepare your tax return and you’ll  also need to keep them beyond tax day in the event your return is selected for an audit. 

 

 

 

 

Don’t Overlook These 5 Tax Breaks

Freeimages/Paige Foster
Freeimages/Paige Foster

Don’t overlook these last-minute tax breaks

Part 3 of a 4-part series

Year-end tax planning may yield some pleasant surprises in the form of tax breaks you hadn’t thought of before. Take a look at these five possible tax breaks and see if they may be an option for you. 

Always check with a qualified tax pro to see if you meet the requirements for any of these tax breaks. 

1.  Earned Income Tax Credit (EITC): While this credit is only available if your income falls within the low to moderate range for your household size, don’t count it out if you’ve had some significant changes to your earnings this year. Those changes can include:

  • Job loss or layoff
  • Significant cut in pay or hours
  • Disability

If you’ve experienced any of these events this year, chances are you struggled with significantly less income than in prior years. Check with a tax pro to see if you are eligible for the EITC for this year. 

2.  Jury duty fees paid to employer: If your employer pays your full salary while you’re on jury duty, they may ask you to turn over your jury duty fees (paid to you by the court) when you return to work. 

Even though jury fees are  miniscule in comparison to your income,   the IRS still regards them as taxable income. Be sure to deduct those fees from your taxes, so you aren’t taxed on money that was passed directly to your employer. 

Be sure to save any statement or receipts verifying the jury duty payments.

3. State taxes you paid last year: If you ended up owing state income tax last year, be sure to include that amount on this year’s return as an itemized deduction. You may also include any estimated quarterly income taxes you’ve paid as well. 

4. Self-employed health insurance premiums: If you’re self-employed, you know firsthand that insurance coverage isn’t cheap. The IRS understands this and allows for self-employed workers to deduct insurance premiums for medical, dental and long-term care insurance. 

This deduction includes insurance premiums paid for yourself and your dependents. You can include this figure as an itemized deduction on Schedule A of your 1040 tax form. 

5. Protective clothing required for work: If your line of work requires you to wear protective clothing, you’re in luck. Items such as hard hats, goggles, work boots, and fire-retardant outer wear are just some of deductible items. 

There is a catch, however. The clothing items can’t double as street wear, and they must be required by your employer. You’ll deduct the cost of these items on Schedule A of your federal tax return. 

As with any deduction, always check with a tax pro to see if you’re eligible. 

These easily overlooked tax breaks can take the sting out of tax day. Gather your receipts and tax records, talk with a tax pro, and get ready to enjoy a lower tax liability for your 2015 taxes. 

5 More Overlooked Tax Deductions

freeimages.com
freeimages.com

Make the most of these overlooked deductions

Yesterday’s post discussed five of the most easily missed tax deductions. Now is a great time to review your receipts and records to see if you qualify for any of these tax deductions.

Hang on to those receipts, however. You’ll need them on tax filing day, and as proof of eligibility for a given deduction should you ever be audited.

As with any deduction, be sure to check with a licensed tax preparer regarding your eligibility for any itemized deduction, especially if this will be your first year claiming that deduction.

IRS tax code is complicated, and a qualified tax pro will be able to assess your unique tax scenario and also determine whether or not you are eligible for these deductions.

1. Education expenses: Education doesn’t come to an end when you receive your diploma or degree. Enrolling in college courses that are specific to your skill set or to train for a new career is a good strategy in today’s economy.

Eligible expenses include books, tuition, fees and supplies not covered by financial aid, scholarships or tuition reimbursement through your employer.

2. Safe deposit box fees: Be sure to keep track of monthly or quarterly safe deposit box fees; you can deduct them at the end of the year.

3. Foster care expenses: The IRS defines a foster child as a child who is placed with you through a court order, judgement, or by a licensed private or government foster care agency. Unreimbursed foster care expenses are also tax deductible.

4. Lead paint removal: If you’re planning on getting rid of the lead paint on that old house you just bought, good news: lead pain removal expenses are tax-deductible.

There is a catch, however. In order for it to be a qualified expense, the lead paint removal must be for the purposes of preventing a child from eating or otherwise consuming the lead-based paint.

The surfaces must also be in bad shape, and be within easy reach of a child who already suffers from lead exposure. In other words, if your child tested positive for lead exposure due to lead-based paint in your home environment, you do have a shot at deducting the paint removal costs.

IRS code relating to this deduction is complicated, so if you will be removing lead-based paint from your current home or a home you just bought, be sure to check with your tax advisor regarding this deduction.

5. Medical travel expenses: If you or a loved one are ill and need to travel out of town for medically necessary treatment, hold onto to all of your travel and lodging receipts.

 

Moving On Up: Tips On Deductible Moving Expenses

movers-24402_1280

You did it. After a long job search and lots of dead-end interviews, you landed a great new gig. Unfortunately, you’ll have to pull up stakes and move in order to be closer to this great new job. Good news: some of your moving expenses can be claimed as deductions on your tax return, which in turn will lower your overall tax liability. Read on for more information.

Requirements

First and foremost, your move must be for work-related reasons only. Ditching the old neighborhood in and of itself won’t cut it. You’ll also have to start your new job within 365 days of your move date.

Here’s where it can get tricky: your new job has to be at least 50 miles away from your old home. For example, if your old gig was 30 miles away from your old home, your new job will have to be at least 80 miles away from your old location.

If you’re unemployed, however, and if your move is strictly for a new job, you’re exempt from the distance requirement.

Qualified Expenses

These expenses are deductible moving expenses:

  • Connection fees for the utilities in your new home
  • Costs associated with disconnecting utilities and services at your old residence
  • Shipping costs, including truck rental fees, vehicle towing, shipping costs for sending household good to your new location.
  • First 30 days of storage fees if you rent a storage unit to stash your furniture and other goods
  • Lodging expenses near your new home if you can no longer stay in your old home and you’re not yet allowed to take occupancy in your new home

Check out IRS Publication 521 for more detailed information.

The How-To:

On tax day, be sure to complete and attach form 3903 to your return. Add up the total and transfer it to page 2 of your 1040 form. The overall deduction will lower your tax liability and in some cases, increase the amount of your return.

Landing a great new job in a new location can be stressful and exciting at the same time. Keep in mind that most of your moving costs will be tax deductible, provided they meet the requirements above.