Last Minute Frequently Overlooked Tax Deductions

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Special Report From “The Bottom Line“

Use this checklist to find savings before filing your 2011 returns. These deductions have been allowed by the IRS and upheld in court.

Medical Deductions

Medical expenses are deductible to the extent that they exceed 7.5% of your adjusted gross income (AGI). Included…

• Acupuncture.
• Alcoholism and drug/nicotine addiction treatment programs.
• Capital expenditures for home improvements required to accommodate a disability. Examples: Elevators, ramps, modifications to cabinets.
• Chiropractic care.
• Closed-caption television decoder.
• Contact lenses.
• Cosmetic surgery necessary to ameliorate a deformity from a congenital abnormality, personal injury or disfiguring disease—not elective cosmetic surgery.
• Dental fees and dentures—not for cosmetic procedures, such as tooth whitening.
• Eye examinations.
• Eyeglasses.
• Health insurance premiums paid with after-tax dollars, including the cost of Medicare Part B and Part D coverage. Self-employed individuals may deduct 100% of their insurance premiums even if they do not itemize their deductions.
• Insulin and prescription drugs.
• Lodging (but not meals) not provided in a hospital while away from home primarily for, and essential to, medical care. Limited to $50 each per night for the patient and a companion.
• Nursing home care required because of a medical condition.
• Premiums paid for long-term-care insurance subject to limitations depending on the age of the taxpayer.
• Prescription contraceptives, legal abortions and vasectomies.
• Psychiatric treatment.
• Seeing aids for the blind, including expenses for Braille publications and guide dogs.
• Telephone equipment for the deaf.
• Transportation to and from hospitals or doctors’ offices. The automobile rate is 19 cents/mile through the end of June 2011 and 23.5 cents/mile from July through December, plus parking fees and tolls.
• Weight-loss programs for the obese.
• Wheelchairs or other special chairs for a disabled person.

Taxes

Taxes other than federal income, FICA, estate or gift tax generally are deductible.Included…

• Co-op owners can deduct their proportionate share of the building’s taxes.
• Foreign taxes, unless a credit is claimed.
• Personal property taxes.
• Real property taxes paid during the year. (This may be different from the amount paid into your escrow account. Your lender will advise you as to the amount to deduct.)
• State and local income taxes paid or applied during the year, including wage withholding, or state and local sales taxes.

Interest

The IRS divides interest into several categories. Personal interest (paid on auto loans, credit card debt, etc.) is not deductible. However, interest on qualified higher-education loans is deductible, subject to AGI and other limitations. The maximum deduction for these loans is $2,500. This is a deduction used in calculating your AGI and is not an itemized deduction.

Mortgage and investment interest expenses typically are deductible, subject to these limits…

• Co-op owners may deduct their share of mortgage interest paid by the association.
• Interest expense paid on loans held specifically to purchase taxable investments is deductible to the extent of net investment income. Excess interest expense is carried forward indefinitely.
• Interest paid for a loan on a boat that has living, sleeping and eating quarters.
• Mortgage interest expense incurred on as much as $1 million in home acquisition debt. The $1 million threshold can be reached using mortgages on only your primary residence and one other personal residence. This includes debt incurred within 90 days of the purchase or major improvement that is secured by the principal residence and/or one additional residence.
• Mortgage insurance premiums for those with income below set levels.
• Mortgage interest expense incurred on home-equity loans of up to $100,000. Generally, the proceeds can be used at the taxpayer’s discretion without risking the interest being classified as nondeductible. One exception is if the loan is taken out to purchase tax-exempt/municipal bonds, which would then classify all home-equity loan interest as nondeductible.
• Points paid on your principal residence generally are deductible immediately, unless you choose otherwise.
• Points paid on a refinance generally are amortized over the life of the loan.

Casualty and Theft Losses

Casualty and theft losses are deductible if they result from a sudden, unexpected and unusual cause to the extent that they exceed 10% of AGI and $100 for each occurrence and cannot be reimbursed by insurance. (The 10% floor does not apply to certain disaster losses). Included…

• Automobile accident if not caused by your willful act.
• Loss of a bank account due to insolvency of the bank.
• Fire, flood and storm damage, including hurricanes and tornadoes.
• Repairs to home and appliances because of damage due to corrosive drywall (known as Chinese drywall).
• Replacement cost of trees and shrubs damaged by storms or fires.

Charitable Contributions

Contributions to qualified charities are fully deductible up to 50% of your AGI. (You can carry over any nondeductible excess for up to five years.) Included…

• Automobile expenses for volunteer activities computed at 14 cents per mile plus parking fees and tolls.
• Cash contributions. (Either canceled check, bank statement, credit card statement or acknowledgment is required for all donations up to $249 and written acknowledgment from the charity for contributions in excess of $249.)
• Fair market value of clothing and other household items donated to charity. A qualified appraisal is generally required if the value of donated items exceeds $500.
• Gifts of capital gains property, such as appreciated stock. The current-year deduction is limited to 30% of AGI. Any excess can be carried over for up to five years.
• Out-of-pocket expenses incurred while engaged in volunteer activities, as long as they are properly substantiated.
• Deductions for charitable contributions of used motor vehicles, boats and airplanes now generally are limited to the amount the charity receives upon the vehicle’s sale and not the fair market value on the date of donation. Upon sale of the property, the charity is required to report to the taxpayer within 30 days the amount of proceeds realized on the sale. Charities are required to give a copy of written acknowledgments of such donations to the IRS.
• Appraised value of the vehicle donation may be used when the charitable organization uses the donated item in its charitable activity.

Miscellaneous

Miscellaneous itemized deductions generally are deductible to the extent that they exceed 2% of your AGI. Included…

• Accountants’ fees.
• Costs for job-related uniforms.
• Fees paid for professional journals.
• Investment management and custody fees for taxable investments.
• Job-related education expenses.
• Job-search expenses for a new job in your present occupation, including…
  • Travel to and from job interviews, including cab fare and/or auto expenses.
  • Costs for preparing, typing, printing and mailing résumés.
• Legal expenses incurred for the production of income or the management, conservation or maintenance of income-producing property.
• Legal expenses incurred in collecting alimony under a divorce decree are deductible. However, legal expenses incurred in a divorce paid by one spouse in resisting the other’s monetary demands are nondeductible personal expenses.
• Tax-preparation fees.
• Union and professional dues.

Other

Other deductions that a taxpayer can benefit from are…

• Teachers can deduct as an adjustment to gross income up to $250 for unreimbursed expenses for equipment used in the classroom (books, computer equipment and supplies).
• Employees and self-employed individuals may deduct as an adjustment to gross income the reasonable expenses of moving themselves and their families if the move is related to starting work in a new location. Deductible expenses include (1) transportation of household goods and personal effects and (2) travel (lodging but not meals).
• Legal fees and court costs paid in conjunction with discrimination or “whistle-blowing” cases after October 22, 2004, are deductible as adjustments to gross income and not as itemized deductions.
• All properly substantiated gambling losses are fully deductible to the extent that they are used to offset that year’s gambling winnings.
• Tuition and fees for higher education up to $4,000 (income limits apply).

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Resources to help you prepare your tax returns:

IRS Publication 501, Exemptions, Standard Deduction, and Filing Information
IRS Publication 502, Medical and Dental Expenses
IRS Publication 526, Charitable Contributions
IRS Publication 529, Miscellaneous Deductions
IRS Publication 547, Casualties, Disasters, and Thefts
IRS Publication 936, Home Mortgage Interest Deduction
IRS Publication 970, Tax Benefits for Education

All the above publications are available through the IRS’s Web site, http://www.IRS.gov or by calling 800-TAX-FORM.

Money, Homelessness and Uncle Sam

Here’s wishing that everyone has had a wonderful Holiday!  I’m believing that 2012 must be a better year than 2011. In so many ways, it’s a year I wish I could forget, but it has taught me some valuable lessons.  I was going to say I don’t see how 2012 could be any worse than 2011,–but, I don’t want to tempt the hand of fate. After all, the Mayan calendar ends around this time next year…. For those of you who don’t know me very well, my sense of humor is very sardonic.

Some people say that knowledge is power and some say that money is power. They’re both probably right. As I have none of the latter, I’ll endeavor to help with the former! Because, dear readers, unless the people of America as a whole, start reclaiming the power that Big Brother has taken and is taking away, we’re going to get worse, not better. Worse in every which way. The biggest threat that faces America today, is between our ears. Yes, that’s right, it’s called our brains, (use them!) and state of mind.  Not only are we in the worst economic times since the Great Depression, (personally, I think it is worse,–it’s just that most people haven’t seen past the small bubble of credit that still exists, giving us a few last gasps of oxygen), but psychologically Americans are not doing very well.

Personally, this year has been the hardest I have ever known. My daughter has had several unexpected medical expenses, and we’re not “out of the woods” yet. As we waited to see the Dr. last week, the TV in the waiting room was set to the news. Although I couldn’t see the screen, I thought I heard that 1 out of every 49 children in the United States is now homeless. I was shocked. 1 out of 49 children??  I don’t watch much TV, so figured I was “behind the times.” After a short search on the Internet, I quickly realized that “1 out of 49” was the number of homeless children back in 2008/2009!  Although I did not continue searching to discover what the current statistics are,  I would imagine I’m fairly accurate in stating that the percentage of homeless children, (not to mention homelessness in general), is higher today.  Many links that I had saved relating to the state of our economy, were from 2009:  scenes from the recession, (btw, this link does work, just hit your refresh key a couple of times if it doesn’t load or you get a blank page the first time), “Hooverville”, and “Invisible People” to name a few.   We have entered, as this article illustrates, a “new face of homelessness.”

With the New Year right around the corner, I’m going to focus on things you can still do this year to keep more of your hard-earned money. Yes, I realize that “tax-time” seems a long ways away, but to make that day a little easier, and your bottom line a little better, there are things that must be done before the end of the year.  My first suggestion is what I like to think of as a “win-win” situation – it’s called donation.  If you have nice/decent things you cannot wear, donate them to a local charity in your area.  If you have nice things that you don’t want and don’t use, donate them.  Using this FREE link, you’ll be surprised at how quickly the value of your items add up.  You win by saving money on your taxes, and everyone wins when your unwanted items help someone who needs what you don’t.  Just make sure you’re giving wisely and don’t forget to get a receipt from the organization.

A couple more informative links:  “12 Smart Year-End Tax Moves“,  and “Last Minute Tax Breaks for the Self-Employed and Moonlighters”  to round things out.

Wow.  This was a fairly “long-winded” post.  That’s going to wrap things up for this post, folks.  In the meantime, if you feel you’ve benefited from any info I’ve shared, head over to my website and sign up for a subscription.  I can promise, you won’t be disappointed.  Although I offer on-line business management and other virtual, personal assistant services, my true love and passion lies in helping people to help themselves by empowering them with information and knowledge they weren’t aware of to solve their own unique set of problems.  “Not On Your Plate” truly is the “go to” information boutique.

Okay, one last tip,–for the next 30 days, you can purchase gift subscriptions on eBay that come with FREE phone support.  Check out my profile: “A Nifty Boutique“.  I’m transitioning from being a “nifty” boutique to the “information” boutique!

Stay tuned,–now that I’m on my soap-box, ya never know what I’ll post next.  I can tell you I’m a big fan of FREE, survivalism, and watching out for the elderly, children and animals.

Until next time……..stock up on ammo,–oops I mean, try not to eat too many leftovers…..

 

Overnight Breakfast Casseroles For Christmas Morning

I am re-posting this link for those who couldn’t open “Overnight Breakfast Casseroles For Christmas Morning“.   As this download is in PDF format, y0u will need a program to open it such as Adobe Reader.

The original post can be found here, compliments of  TheFrugalGirls.com.

Hope this works!

What Does Grandpa Need For Christmas?

What does Grandpa need for Christmas?  If you care for an aging parent or loved one who has trouble reading the fine print, make life a little easier with some of these great gadgets! 

Resources that help the #elderly with:

READING:

• Portable electronic magnifier
• The Apple iPad 2 tops the list as the best eReading device for the visually impaired.
• Computer magnifier/reader; download a FREE trial of ZoomText Magnifier that magnifies everything on the computer up to 36 times
• For a low-tech alternative, check out the Talking Books program provided by the Library of Congress.  Offers a free tape player and unlimited FREE books on tape to the legally blind.  888-NLS-READ (888-657-7323)
• Portable text-to-speech; the Intel Reader turns written text into spoken words.  A handheld device, which includes a five-megapixel auto-focus camera and an Intel processor, weighs a little more than one pound and is about the size of a paperback book.  You hold the device over a page and shoot and capture the image which the device can read aloud at a speed you choose.  It can store up to 500,000 pages of text.  The battery lasts for more than four hours.  As a bonus, this device can also help the learning impaired. 
• App for iPhone 4 users, ZoomReader uses the built-in iPhone camera to take a picture of text and then reads it aloud.  Great value for $19.99.  Click here to read a review.

DIRECTIONS:

• A small, handheld GPS navigator, “Trekker Breeze”,  that announces the names of streets, intersections and landmarks as you’re walking or riding in a vehicle.  With the press of one extra-large buttons, it gives you your exact location.   (Dear readers, I want one of these and I’m not considered a senior citizen yet!)

MONEY IDENTIFICATION:

• Protect your loved one from being shortchanged or making mistakes when paying with cash.  The iBill identifies all US bills by voice or a series of tones or vibrations for privacy.  Small enough to fit on a key ring, you just insert the bill(s) into a slot in the battery operated device and most bills are identified in less than 1 second. 
• If you already have an iPad 2, iPhone* or iPod Touch*, download the “LookTel Money Reader” app for only $1.99 that identifies US currency out loud.  It doesn’t require an Internet connection, so can read money from any location.  Click here to see a demo.

TALKING TELEPHONES:

• The Samsung Haven™ from Verizon Wireless is able to “speak” everything that appears on the display screen, including caller ID names and numbers, text messages and keypad presses when you dial a number.  It also lets you make calls and send text messages by speaking the name of the person that you want to contact.  Has extra-large, high-contrast text and big touch keys.  Only $39.99 with a two year contract.
•  The ClearSounds ClearDigital A1600 Amplified DECT 6.0 Amplified Cordless Phone has big buttons with a backlit keypad that speaks the numbers as you dial and caller-ID that speaks and displays the name and number or the person who is calling.  It also amplifies incoming speech up to 50 decibels.  Has a built-in answering machine and 8 photo-memory dial buttons that let you insert pictures of family members or friends over pre-programmed buttons, so you can simply press the picture of the person you want to call.  

 

Taxes

Yeah, I know, nobody’s favorite topic, that’s for sure! However, it’s not too early to start thinking smart for end of the year tax moves.  This article from Kiplinger’s caught my attention: “Year End Tax Moves for 2011“.

That’s all for today, folks.

Until next time, enjoy the spirit of the Holiday Season!