Tax saving opportunities
The Minnesota Society of CPAs explains that taxpayers are generally familiar with common deductions, such as mortgage interest and medical expenses, but fail to claim others. Here are tax deductible expenses for you to help you prepare your 2006 ...
The Minnesota Society of CPAs explains that taxpayers are generally familiar with common deductions, such as mortgage interest and medical expenses, but fail to claim others. Here are tax deductible expenses for you to help you prepare your 2006 tax return.
Charitable contributions: People know that charitable contributions of cash can be deducted but not everyone realizes that you can deduct the non-cash donations, such as used clothing and household goods. The deductible amount is item's fair market value.
Student loan interest: Interest paid on student loans is deductible as an adjustment to gross income -- up to $2,500 per year for as many years as it takes to repay the loan.
IRA contributions: Contrib-utions to a traditional IRA might be deductible, depending on age, total income, and whether covered by retirement plan through your employer.
Premiums you pay to cover yourself and your family are 100 percent deductible.
If you incur a penalty from an early withdrawal of a certificate of deposit or other type of time deposit savings account, the the penalty is deductible.
In computing your adjusted gross income, you can deduct up to one half of self-employment taxes paid during 2006.
You may to deduct interest payments up to $100,000 of home equity loan debt.
Reservists who serve more than 100 miles away and stay overnight can deduct non-reimbursed travel expenses.
Divorced taxpayers may write off alimony expenses as an adjustment to gross income.
There are a number of deductible expenses that fall into miscellaneous itemized deductions. These expenses are deductible to the extent that their total exceeds two percent of your adjusted gross income.
The most common are:
Non-reimbursed employee business expenses: including business expenses incurred with your job, such as dues paid to a union or professional society, business-related travel, courses you take to improve your job skills, professional books and journals, and work clothes and uniforms.
The money you spend looking for a job is deductible as long as you're looking for a job in your current line of work. Also travel (only if the trip relates primarily to seeking a new job), resume preparation, postage, and telephone calls.
Also investment fees, safe deposit box rental, subscriptions to investment publications and other expenses incurred in managing your investments.
You can deduct fees you pay to a CPA or other tax preparer, as well as expenses paid for tax preparation software, tax publications, and electronic filing.
Information and resources are available to the public on the MNCPA Web site www.mncpa.org/information including state and federal tax forms and information and financial planning information for individuals and small businesses.
A free CPA referral service is also available on the Web site or by calling 800-331-4288.