Tax Time: Last Minute List of Overlooked Deductions.

Here’s a list of some last minute tax saving deductions you may have missed for the tax year 2011.

Of course, if you use TurboTax then you don’t have to worry about these since the software will find them for you

State Sales Taxes

Makes the most sense for tax payers in states that don’t collect a state income tax. For most of us unlucky enough to live in the rest of the country, you’re likely better off deducting the state and local income tax unless you bought a lot of high-ticket items this past year.

Reinvested Dividends

If you sold a stock or mutual fund which you had reinvested the dividends during the time you held it, don’t forget to factor those dividends in to your cost basis. It will lower the capital gains tax when you sell.

Out-of-Pocket Charitable Deductions

Out of pocket costs include such things as ingredients for casseroles you prepare for a nonprofit organization’s soup kitchen and stamps you buy for your school’s fundraising mailing count as a charitable contribution. You’ll need the receipts and written acknowledgement from the charity to document the services though.

Student Loan Interest Paid by Mom and Dad

If you’re not claimed as a dependent, you can qualify to deduct up to $2,500 of student loan interest paid by your parents. However, they cannot also claim the same interest deduction so be sure to check with them.

Job-Hunting Costs

If you were out of work and looking for a new job in the same profession last year, you can deduct some of the costs, provided they total 2% or more of your adjusted gross income (AGI).

Moving Expenses to Take Your First Job

If you had to move 50 miles or more to get your 1st job, then you may be able to deduct the cost of the move. To find out if you qualify, see: Tax Topics – Topic 455 Moving Expenses.

Military Reservists’ Travel Expenses

If you’re a National Guard or military reservist, and you travel more than 100 miles from home and are away from home overnight you may be able to deduct the cost of lodging and up to half the cost of your meals. Plus an allowance for driving your own car to get to and from drills.

Deduction of Medicare Premiums

If you’re self employed and qualify for Medicare, you may be able to deduct the premium payment for Medicare Part B and D as well as the cost of supplemental Medicare policies (a.k.a. “medigap”). You cannot claim this deduction however if you are eligible for employer-subsidized health coverage offered by your employer (if you have another job).

Child-Care Credit

You can qualify for a tax credit worth between 20% and 35% of what you pay for child care while you work – unless your boss reimburses your costs. See: Tax Topics – Topic 602 Child and Dependent Care Credit for details.

This is a big one because it’s a tax credit instead of a deduction, so don’t pass this up if you qualify!

Estate Tax on Income in Respect of a Decedent

If you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax, it can save you a bunch of money. See : TaxAlmanac – A free online tax research resource and community – Income in Respect of a Decedent – IRD for more.

State Tax Paid Last Spring

If you paid state taxes last year, don’t forget to claim that on this year’s taxes or it could cost you twice!

Refinancing Points

If you refinanced your mortgage with a new lender and paid points, then you may qualify to deduct the points over the life of the loan. Here’s an example: If your mortgage was a 30-year loan, you can deduct 1/30th of the points each year (or $33 for every $1,000 of points paid). Not much, but it all adds up.

Jury Pay Paid to Employer

Some employers require that you fork over your jury pay if you serve, but the IRS requires that you claim that pay as taxable income. If your employer takes your jury pay, they you can deduct that pay from your taxable income, to balance things out.

American Opportunity Credit

This could be a big deal. You can deduct up to $2,500 of tuition and school related expenses for the year – and if you already owe $0 in federal taxes, you’ll get this credit as a refund. It will help this year, but it won’t do much for the overall student loan debt burden. :-/

Baggage Fees

“Baggage fees? ” I hear you say. Yes. Baggage fees. It turns out that if you’re self employed and traveling on business those baggage fees are a deductible travel expense. Who knew!?

Energy-Saving Home Improvement Credit

This credit is worth 10% of the cost of any qualifying energy saving home improvement up to $500. There are a host of caveats though (like you can’t have claimed it in the past 6 years), so check with your tax pro.

Additional Bonus Depreciation

Business owners can deduct 100% of the cost of qualified assets placed in service during 2011. This deduction only applies to new assets with recovery periods of 20 years or less. Computers, machinery, equipment, land improvements and farm buildings all qualify.

Sale of Demutualized Stock

Eh? What’s this?

Demutualized stock is “stock that a life insurance policyholder receives when the insurer switches from being a mutual company owned by policyholders to a stock company owned by stockholders.” The IRS used to state that such stock had no tax basis, and so the taxpayer owed tax on 100% of the proceeds of the sale when the stock was sold. But after a long legal struggle, a federal court ruled in 2009 that the IRS was wrong.

The court didn’t say what the basis of the stock should be, but many experts think it’s whatever the shares were worth when they were distributed to policyholders. If you sold stock in 2011 that you received in a demutualization, be sure to claim a basis to hold down your tax bill.

Home-Buyer Credit

This is the famous (or infamous, depending on your view) home buyer credit of 2010, but extended for a select few. If you are a member of the uniformed armed services, the foreign service or the intelligence community who were on extended duty outside the United States at least 90 days during the period after December 31, 2008, and ending before May 1, 2010 then you may be still eligible for this credit.

Source.

Related Posts:

• Tax Time: Kiplinger’s “Do It Yourself Pay Raise” (Video).
• Are You Prepared to Pay $3,598 More in Income Tax for 2012?
• How to Get Your Tax Refund Now!
• Tax Time: How to Claim the Making Work Pay Credit on Your Taxes.
• How to Get Free Help With Taxes!

Tax Time: Kiplinger’s “Do It Yourself Pay Raise” (Video).

Want a little more more in your paycheck every month? Get a big, fat tax refund every year?

Here’s how to turn that refund into a raise:

Related Posts:

• How to Get Free Help With Taxes!
• TaxTime: 2010 Tax Law Changes.
• Tax Time: 4 Big Tax Changes for 2011.
• Tax Time: Last Minute List of Overlooked Deductions.
• Are You Prepared to Pay $3,598 More in Income Tax for 2012?

Are You Prepared to Pay $3,598 More in Income Tax for 2012?

Many people are not aware of the extent to which the U.S. income tax laws will change next year if Congress does not move to make them permanent. This goes well beyond the much hyped payroll tax break. In fact, the $3,598 doesn’t even factor in the increase if that provision fails to win extension!

To make the situation clear, a recent Yahoo! news story (Why Your Tax Bill Might Surge Next Year) profiles a fictional married couple, meant to portray the average tax paying family.

Meet Bill and Joan.

Bill and Joan Smith are 26 years old, married and have two young children. Bill works in sales and earns $65,000 a year, while Joan has re-entered the work force and earns $35,000 a year.

This gives them a combined income of $100,000 annually – well below the various “millionaire” threshold often touted by politicians when trying to make a tax increase more palatable to the masses.

Bill still owes a chunk of change on his student loans, and pays about $3,000 a year in interest on them.

Since Joan went back to work, they need childcare. This costs them about $3,000 a year.

In addition to her salary, Joan also inherited some shares of AT&T stock from her grandmother. She earns $1,000 in dividends each year from that stock.

Factoring in their deduction for mortgage interest, they have $20,000 in itemized deductions for the year.

Meet the new tax code.

The Bush tax cuts are set to expire at the start of 2013, and when that happens the Smiths will pay $960 more in 2012 taxes than they will in 2011 taxes. This is the result of the elimination of and tightening of marginal tax rates .

Next on the chopping block, the student loan interest deduction. That will also expire without an extension, leaving Bill to lose out his $3,000 deduction and costing him about $840 more on his 2012 taxes.

The allowable child care deduction would drop from $3,000 to $2,400 an the child tax credit would drop in half costing them an additional $1,000 in taxes.

The marriage tax penalty is set to make a come back also, costing the Smiths an additional $500 in taxes.

Remember Joan’s AT&T stock that she inherited from her grandmother? Due to the increase on dividend tax rates when the Bush tax cuts expire it will cost her another $130 in taxes.

Tax law changes not considered.

All of the above ignores other aspects of the tax code, such as the Alternative Minimum Tax, which will ensnare more people if it is not adjusted yet again. Also missing from the analysis are a number of other itemized deductions and personal exemptions that phase out at certain levels of income.

Summary.

Due to tax code changes in the coming year, the average American family will owe $3,598 more in taxes with no change in their income to offset this increase.

Here’s a list of what is due to expire in the next two years.

Major Individual Income Tax Benefits Expiring 12/31/2011:

• Personal tax credits applied against income tax no longer apply

• Higher alternative minimum tax exemptions revert back to extraordinarily-low thresholds

• $250 school teacher expense deduction ends

• Mortgage insurance premium deduction expires

• State and local sales tax deductions expire

• Tuition and related fees deduction end

• IRA to charity tax-free transfers stop

• 2% Social Security tax reduction ends

Major Individual Income Tax Benefits Expiring 12/31/2012:

• Marriage penalty equalization ends

• Dividends taxed at capital gains rates removed, taxed at regular rates now

• Capital gains low tax rates expires

• Removal of itemized deduction phase out for higher income Americans

• Removal of personal exemption phase out for higher income Americans

• Child care deduction limit of $3,000 reverts to $2,400

• Child credit reduces from $1,000 per child to $500 per child

• Low 10% tax bracket for low income Americans is eliminated

• Lower income tax rates and smaller brackets expires

• Refundable adoption credit and reduced deduction

• American Opportunity college education credit expires

• Major reduction in earned income credits and refunds

• Income tax exemption for debt forgiven on home foreclosures and repossessions

• Deduction for student loan interest ends

• Education IRA limit drops from $2,000 to $500

Related Posts:

• Tax Time: Last Minute List of Overlooked Deductions.
• Tax Time: Kiplinger’s “Do It Yourself Pay Raise” (Video).
• How to Get Your Tax Refund Now!
• Is Federal Income Tax Unconstitutional?
• Tax Time: How to Claim the Making Work Pay Credit on Your Taxes.

How to Get Your Tax Refund Now!

How Do You Start Getting Your Tax Refund Money Now?

What Is an Allowance?

• Yourself
• Your spouse
• Each of your dependents
• Some tax credits
• Some itemized deductions
• Additions to the standard deduction
• IRA Contributions
• Business expenses
• Job-related moving expenses
• Alimony payments

When Should You Fill Out a New W-4?

• Get a pay raise
• Get married or divorced
• Gain (or lose) a dependent
• Buy a home
• Win the lottery

Don’t Let Your Money Go to Waste!

Related Posts:

• TaxTime: 2010 Tax Law Changes.
• Tax Time: The Difference Between Tax Deduction And Tax Credit.
• Tax Time: Tax Deadline Extension.
• Tax Time: Congress Causes Delay for Itemized Tax Returns.
• Tax Time: 4 Big Tax Changes for 2011.