Tax Issues
Missed Tax Deductions
Cancellation of Debt income from foreclosures and short sells
- Can be excluded from income if on primary residence
- Other situations in which cancelled debt income may be excluded
State Sales Tax deduction
- Better for states that don't have a state income tax but might still work for
some in Utah, especially if their state income taxes paid during the tax year
are low.
- Sales tax on purchase of vehicle, RV, plane, or supplies for home
improvements may increase benefit of deducting state sales tax instead of
state income tax
- If you claim state sales tax deduction and receive state income tax refund,
refund isnt included on next years tax return as income
Reinvested dividends
- Remember to include reinvested dividends in the cost of your stock or
mutual funds when you sell it and calculate the gain
Out-of-pocket charitable donations
- Mileage, food, supplies for activities in connection with a charitable
organization like church or school can be added to itemized deductions.
- Be sure to keep receipts and document the activity
Student loan interest
- If paid by mom and dad it is deductible by the student on their own tax
return, not by mom and dad on their tax return
- IRS considers it a gift from mom and dad
Job hunting costs
- If looking for a position in the same line of work expenses can be added to
miscellaneous itemized deductions.
- Food, lodging, and transportation if traveling away from home and overnight,
cab fares, employment agency fees, cost of printing resumes, business
cards, postage, and advertising.
- If looking for a job in a new line of work, or if looking for your first job, job-
hunting expenses aren't deductible
Moving expenses
- New job must be at least 50 miles away from old home
Child care credit
- 20%-30% of child care costs if it allows you to work.
- Better option might be child care reimbursement plan through work.
- Plan contributions are pre-tax
State income tax paid with previous year's state tax return is an itemized deduction.
Refinancing points
- Amortized over the life of loan.
- If you sell the house or refinance again with a different lender, deduct
remainder of points not previously deducted.
American opportunity credit
- Up to $2,500 credit for college tuition and books and fees.
- Up to $1,000 of credit refundable even if no income to report on tax return
- Credit phases out for single taxpayers with income over $80,000 and
married filing joint taxpayers with income over $160,000.
Energy saving home improvements
- 10% of qualified costs up to max $500 credit.
- If you've taken this credit in previous years, you can only take additional
credit if you haven't already reached the $500 max
Kipplinger - "The Most-Overlooked Tax Deductions"
