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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"


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