Advice from Labib: What Tax Deductions Are Available to Me?
Advice from Labib
What Tax Deductions Are Available to Me?
When Congress changed the tax codes with the Tax Reform Act of 1986, it eliminated many of the deductions that enabled many people to avoid paying income taxes. The revision was very thorough. However, for those taxpayers who itemize, some key deductions remain.
For example, most if not all of your family's unreimbursed medical and dental expenses may be deductible. If you had high medical or dental bills during the past year that weren't covered by insurance, you may be able to deduct them from your adjusted gross income when you calculate your income taxes.
The following medical and dental expenses are deductible: examinations, surgical procedures, orthodontics, physical therapy, prescription drugs, cosmetic surgery, medical insurance premiums, and travel to and from facilities where medical treatment is given. Expenses that are not deductible include weight-loss programs, health club dues, diaper services, maternity clothes, smoking cessation programs, and nonmedical insurance premiums.
One key fact: you may only deduct medical and dental expenses to the extent that they exceed 71/2 percent of your adjusted gross income and were not reimbursed by your insurance company or employer.
In addition to medical and dental expenses, certain miscellaneous expenses-primarily unreimbursed employee business expenses-can be written off if they exceed 2 percent of your adjusted gross income. Some of the expenses that qualify for this deduction are: union dues, small tools, uniforms, employment agency fees, home office expenses, tax preparation fees, safe deposit box fees, and investment expenses. Your tax advisor will be able to tell you exactly what's deductible for you.
The end of the year is the time to take one last good look and try to determine if you qualify or if you're close.
If you're not close to reaching those cutoffs, you may opt to postpone paying these expenses until the following year, when you may be able to deduct them.
On the other hand, if you're only a little short of the threshold amount, you may want to hunt for additional expenses that will push you over the line.
With a little planning and some help from a qualified tax professional, you may be able to lower your income taxes this year. You just have to plan ahead.
Alfred Labib is an Independent Financial Advisor. "Our Goal Is To Help Investors Grow And Preserve Their Wealth Through Discipline And Process." 301-824-4523, www.labibfinancial.com.