3/13/2013 6:45 PM ET|
7 tax breaks you don't want to miss
It's crunch time for taxes. Go through this list to make sure you don't leave money on the table.
The clock is ticking toward the April 15 tax filing deadline. In the rush to get your return ready, it's easy to overlook some lucrative deductions. This year, there's more confusion than usual, thanks to the last-minute fiscal cliff deal that extended some tax breaks but not others.
The weak economy and high unemployment rate have made some credits and deductions relevant to people who may not have qualified for them in the past.
Here are some tips from tax pros to get all the breaks you deserve:
Know the true value of your charitable donations. Some people may be guilty of inflating their charitable contributions on their tax returns, but TurboTax Vice President and CPA Bob Meighan suspects far more undervalue what they give to charity. Some particularly easy to overlook contributions include mileage, out-of-pocket expenses and the value of used goods.
You can't deduct the value of your time, but if you itemize you can take a tax break for mileage incurred driving to and from your volunteer commitments. (If you don't itemize, you can't write off any charitable contributions.) The rate isn't exceptionally generous — just 14 cents per mile — and you'll need to keep a record of how many miles you drive, the day you drove them and the charitable purpose.
Out-of-pocket expenses incurred while volunteering are another potentially deductible expense.
"If you're a Boy or Girl Scout leader, mail birthday or get-well cards for a charitable organization or prepare food for your local soup kitchen, keep track of the cost of the adult uniforms, books, postage and even the ingredients you purchased for the food so that you might deduct the amount on your taxes," said enrolled agent Cynthia M. Jeanguenat of Virginia Beach, Va.
Clothing, furniture, toys and other used goods donated to good causes could reap you a far more substantial deduction. The IRS allows you to deduct the fair market value of such goods, and those values tend to be significantly more than you could sell the items for in a yard sale.
TurboTax's free sister site, ItsDeductible, provides values for thousands of items based on the prices they fetch on eBay. Those nearly-new hardcover books you're practically giving away in your garage sale could have sold for $7 on the auction site. Since your tax break is equal to your tax bracket, that $7 would equal $1.75 off your taxes if you're in the 25% bracket.
Document each donation with an itemized list of items and their values. Take a snapshot with your camera or phone as further proof. And get a receipt from the charity.
You'll find more details in IRS Publication 526, Charitable Contributions.
Take credit for retirement savings. Low- and moderate-income taxpayers get an extra tax break if they save for retirement. Not only are their contributions to retirement accounts typically untaxed, but they also can get a credit that can reduce their tax bill by up to $1,000. (Credits are usually better deals than deductions, since they offset your tax bill dollar for dollar.)
Contribution to individual retirement accounts (IRAs), Roth IRAs and workplace retirement plans such as 401k's and 403b's all qualify. The credit, which equals up to half of the first $2,000 you contribute, starts to phase out as income rises. But single people with adjusted gross income up to $28,250 and marrieds with incomes up to $56,500 qualify for at least some credit. The income limit is $42,375 for heads of household.
You can learn more in the retirement tax credit section of the IRS site and by reading IRS Publication 4703.
Offset medical expenses. Your health costs have to be fairly hefty to qualify for this deduction. Only medical expenses in excess of 7.5% of your adjusted gross income qualify for the write-off in 2012. The minimum rises to 10% for tax year 2013 for taxpayers under 65.
But the weak economy makes it more likely that people have qualified for this deduction.
"People overlook this because they're not sure they qualify," Meighan said. "With the economy being so tight and unemployment so high, their incomes may have been significantly reduced over the years, so it's easier for many people [to take the deduction]."
Out-of-pocket costs for doctor visits, hospital stays and prescription drugs all count toward the total, as do weight-loss and smoking-cessation programs if your doctor prescribes them.
Your mileage to and from treatment can be a write-off, too, at 23 cents a mile. So can other transportation costs such as tolls and parking. You can find more information IRS Publication 502.
What doesn't qualify? Over-the-counter medications, including nicotine patches and gum, trips or programs to improve your general health and most cosmetic surgery.
Write off your move. Job-hunting expenses can be deductible, but they have to be substantial (more than 2% of your AGI), and you have to itemize. If you actually find a job and have to move, however, you are far more likely to qualify for a tax break.
The moving expense break "is an 'above the line' deduction. You don't have to itemize," Meighan said. "It's an adjustment to your income."
To qualify, your new workplace typically has to be at least 50 miles from your previous home, and you have to work full time for at least 39 weeks during the 12 months following your arrival at your new job location. The time test can be waived in case of death, disability, layoffs and other factors. Also, if you're a member of the armed forces and you were ordered to a permanent change of station, you don't have meet the distance or time requirements. For more information, check out IRS Publication 521, Moving Expenses.
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They forgot the #1 tax break of all. Black, Unemployed, 8 kids and no plans on getting a job.
Have you seen how hard it is to get the medical deduction tax break? It's nearly impossible. Medical expenses have to be nearly catastrophic before anything is allowed. Two years in a row I had over the 7.5% and could NOT write off any part of it. Most of it was because I couldn't itemize. I couldn't because I didn't have any children or a mortgage to itemize. So it looks as though I was penalized for being debt free. If they want to help with health care, then make it easier to write off the legitimate expenses. I wish I had saved it but I read an article recently that even said that the ability to write off medical expenses was so complex that very few people can write off much if anything. What a waste of tax codes if less than 1% can use even part of it. Obamacare will raise the level to 10% soon which will probably knock off even more that may be eligible. Washington has no idea how to help. But then again they are very good at selling you something that you will probably never be able to use. Kind of like telling someone the value of heated seats for their car but they live in the tropics. Sounds good but it's only costing the consumer while someone else benefits.
Last year I had very high medical out-of-pocket expenses so I was able to claim over $6,000.00 because I had three surgeries among other expenses. This was the first year I was able to claim it which helped me tremendously. I doubt that I will ever be able to claim this deduction again. And to think that it will increase from 7.5% to 10%. Go figure. My guess is that the government just wants us to keep paying more.
"Get credit for working. This is a refundable credit, which means you can get money back even if you don't owe any federal taxes. The credit was designed to provide an incentive to work for low- and moderate-income families."
An *incentive to work* for low- and moderate-income families?! Why are we paying them to have low to moderate income?! How about providing for your family is incentive enough?
I think our tax system, if we are to have one, needs to be revised so that those who leech off the system pay more in taxes and those who take care of themselves pay little to no taxes. Too many people (typically the leechers or liberals) argue that some people don't pay their "fair share" while ignoring the fact that far too many are leeching off of a system that shouldn't exist.
"Incentive to work..." That's what's wrong with America, this mentality that I should get paid extra for getting a job that doesn't even provide enough for me/my family. Just disgusting...
buy the time you drive to work at gas prices now days and insurance and and keep you truck on the road with tires and repairs, and then eat pay bills , you in the hole and
we do with out alot of stuff because of the price of things now days,
and when i dont get to have my coffee in the morn, im going to be one grumpy old man ,
yea i know there is places you can get free stuff , ill tell ya , i am not there yet , but almost ,
i really dont no how these kids now days are doing this , what hurt me was i dont work that second job ,
and really i dont i am getting old and lazy i think , so i will not work 2 jobs now i am wopped ****,
no vacation in 10 years , used to work 7 days a week , now only 6 , well you all be good,
like that other guys said bury your money , now i no why my grandpa did back in the 30's , now i understand , he had to hide the extra wheat in the top of the barn to keep them snoopy people that came around to make sure you didnt have more then you needed , i for got what he called them , but s.o,b was in there i member that
Think of all the unemployed public servants complaining to Congress if it set up a simple percentage rate for everybody, repeat everybody, including the upper 2 per centers.
Where is the Tea Party when it makes sense?
Maybe most of them are the 2 per centers.
All the legal valid current International Yugoslavian Dinara YUM / YUO / YUR/ YUN money subjected to U.S. IRS 11 % Foreign Taxes ( FT ) . Courtesy : OFAC - Office of foreign assets control of U.S.A.
The old gold standard global cash EEU ' s YUM / YUO / YUR / YUG / YUN Yugoslavia Dinara (s) ,Narodna Banks valued cash bills banknotes including of 1989 valid thru 1996 up to the current world allowable legal limit of 500 Billion denominated banknotes at par value and current are 11 % taxable by the U.S. IRS without any redenomination ( illegal and disallowed ) of the banknotes.
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