Your Taxes: Deductions & Credits

BOSTON (CBS) – Tax deductions lower your taxable income. Tax creditsprovide a dollar-for-dollar reduction of your income tax liability.

Child Care Credit: You can claim up to $3,000 that you paid someone to care for your child and up to $6,000 for two or more dependents. See IRS material at end of segment.

Health Insurance Premiums: If you are self-employed, 100% of the premiums are deductible. For other tax payers, if you have paid any health insurance premiums last year they become part of your medical expenses and your medical expenses are deductible after they have reached 10% of your income. If you are over 65 it will remain at 7.5% of income thru 2016.

Long Term Care Insurance Premiums: Part of the cost of the insurance premium will be treated as a medical expense and will be deductible once your medical expenses exceed 10% of your income. The older you are the larger the deduction for LTC insurance. Check IRS publication 502.

Contributions: Cash is always appreciated but in order to get a deduction you need to document your contribution. Rules require either a bank record that supports the donation or a written statement from the charity if the contribution is more than $250.

Noncash Contributions: Remember around Christmas when I suggested you take your old stuff to the Goodwill and get a receipt. Find the receipt. People forget about the noncash contributions they have made during the year. The receipt reminds you that you did donate all of that stuff to the Goodwill. You can no longer claim deductions for used clothing and “household goods” that are not in “good” condition or better. Check the Goodwill’s website to get a list of suggested deduction amounts.

Often overlooked are the contributions you made with your credit card. Look for those receipts as well.

The Savers Credit: Congress wanted to encourage lower income wage earners to start saving for retirement. So they came up with a tax credit when you contribute to your retirement plan. This tax credit could help you offset the cost of the first $2,000 contributed to an IRA, 401(k) and other retirement plans. There are income limits.

More from Dee Lee

Advertisements

Prinzo and Associates LLC is a tax firm located in Pittsburgh's South Hills. Since 1991 we have been helping clients with tax problems. We also help clients with retirement and other financial needs. If your business is in need of payroll, quickbooks or other financial assistance, we are here to help!

Tagged with: , , , , , , , , , , , , , , , , , , , , ,
Posted in advice, business, finance, management, money, pittsburgh, taxes, tips, Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Contact
724-942-3622
Monday - Friday 9a-5p

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 8 other followers

%d bloggers like this: