Put miscellaneous deductions to work

Comments:  | Leave A Comment

Using the 2 percent limit

Some deductible expenses that are subject to the 2 percent limit include job-related expenses that your employer does not reimburse, such as travel, entertainment, gifts associated with your work, license or legal fees, and educational costs. Qualified costs you incur for a home office fall in this category, as does the depreciation on a computer your employer requires you to use for work. Uniforms, work clothes not suitable for everyday use, and tools you need for your job also fall into this category, as would union dues. When you look for a job in the same field, your related expenses would be subject to the 2 percent limit. Deductions for tax preparation fees and several other expenses are also subject to the 2 percent threshold.

Other miscellaneous deductions

There are some expenses, however, that do not require deducting 2 percent of your AGI. If you own income-producing property that is stolen or suffers damage during the year, that loss will not be subject to the 2 percent limit. Examples include stocks, bonds, vacant lots, gold or silver, and artwork. If you have gambling winnings, you have to report them on your tax return; but you can also deduct gambling losses (up to the total of your winnings). As an example, if you win $1,000 and lose $1,200, you can deduct $1,000 of your losses, effectively canceling any taxes you might have owed on your winnings. If you have a physical or mental disability, you can also deduct the full cost of any impairment-related work expenses, such as a reader if you are blind or a sign language interpreter if you are deaf.

Other commonly overlooked deductions

In addition to the miscellaneous deductions that many taxpayers fail to claim, there are other valuable deductions and credits that taxpayers overlook every year. They include deductions for state and local income tax, medical and dental care expenses, the child and dependent care credit, mortgage refinancing costs, and self-employment expenses. Your CPA can determine whether you qualify for these deductions, including the limits that apply in some cases.

Consult your local CPA

There’s a lot more to know about miscellaneous deductions and about the kind of tax planning that can ensure you’re paying the right amount of taxes. Before you finalize your tax return, be sure that you’ve claimed all the deductions and credits to which you’re entitled. If you’re not sure that you’ve taken the right ones, turn to your CPA for expert advice. He or she can answer all your financial questions. To find a CPA in Pennsylvania by location or area of expertise, visit http://www.ineedacpa.org.

« Previous page 1 2

Comments

blog comments powered by Disqus
Follow

Get every new post delivered to your Inbox.

Join 9,825 other followers