Tax season is almost here and Certified Public Accountants continue to watch the news on “fiscal cliff” updates. Tax season could become more difficult for tax payers as the news on tax credits continues to be up in the air. In order to minimize any liability, folks need to pay attention to miscellaneous deductions. No matter how small or insignificant you may feel they are, the sum of all the “other” deductions may help a great deal on your final tax return.
The IRS provides standard deductions for every tax payer. Depending on your filing status and how many dependents can be claimed, the deduction is often a decent amount. All itemized deductions are reported on Form 1040 Schedule A. There are also some “miscellaneous deductions” which can also be claimed on this for. Meet with your local CPA to maximize your tax return.
Miscellaneous deductions are broken down into two groups.
*Those deductions which are subject to a “2% rule” – money amount which is equal to two percent of the adjusted gross income; which is the last line on the first page of the 1040 form.
*Those deductions which do not fit under the other rule.
There are specific deductions which can be subject to the 2% limit rule. Your Certified Public Accountant will fit the deductions in the proper categories.
*Medical and dental expenses have their own percentage limit, (7.5% for your adjusted income).
*If you were searching for a new job, work clothes or uniforms, tools, union dues, or work related travel and transportation, you can claim these unreimbursed expenses.
*Deduct your tax preparation expenses!
*Certain investment or legal fees
*Safety deposit rental fees which are not used for personal effects, i.e. jewelry.
*See your CPA for the full list of possible deductions.
Miscellaneous deductions which are not subject to the 2% limit affect less of the population of tax payers but are important nevertheless to those who can claim them should be deducted as well. An example of such deductions would be: impairment-related work expenses for those with disabilities or casualty and theft losses from property which produces income. The CPA will make sure that any and all deductions which pertain to your personal situation will be utilized when preparing your tax return. Using deductions properly will optimize your results. Any liability will be minimized and a tax refund will be maximized.
The earliest date the IRS will accept e-files is January 22, but it is never too early to start organizing your tax documents. There is no early request for tax returns. If you organize your deductions, the time spent on preparing your tax return will be less. If you have your documents saved and organized throughout the year, you will limit the amount of time scrambling for this or that receipt. Your CPA will request documentation for all deductions. Have them ready to go when your CPA is ready to prepare your return.