Friday, February 09, 2007

A Baker's Dozen of Tax Deduction Wallflowers

Kevin McCormally of Money cites a highly-placed IRS source in his list of 13 commonly overlooked deductions. First on the list was the last-minute renewal of a choice of sales tax or income tax which is beneficial to states like Tennessee with a narrow income tax and high sales taxes. Second is another December rescue--deduction for K-12 teachers purchasing supplies for their classes. Third is educational expenses, with special emphasis on the Hope and Lifetime Learning Credits. Fourth, a new feature, nondependent children can claim a deduction of up to $2,500 for student loan interest paid by parents. Fifth, noncash contributions to charities, including 14 cents per mile driven (32 cents if related to Katrina). Sixth, moving expenses to a new job--even though costs of getting the job generally are nondeductible. As a bonus, the deduction can be claimed even by nonitemizers. Seventh, military reserve travel expenses if over 100 miles and involves an overnight stay. Eighth, even working parents who have child-care reimbursement plans at work may be able to get a $200-$350 credit on the difference between maximum dollars eligible for credit and maximum dollars on a child-care reimbursement plan. Ninth, estate taxes paid on an inherited IRA (or similar financial vehicle). Tenth, any balance due paid on state or local income taxes (beware here, if you got a state income tax refund and itemized, you probably have includable income). Eleventh, refinancing points (and now the telephone tax credit as well)--small but generally worth the effort. Twelfth, increased basis on stock sold if the stock included a reinvested dividends option (the reinvested dividends in the past were includable income, thus added to the basis). Finally, a new line has been added to help jurors who were required to turn over jury duty pay to their employer.

Many useful hints, a few of which (such as estate taxes on inherited IRA or the jury duty pay tax status) I was not familiar with.


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8:28 PM  

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