Tax Season- Plain and Simple

I found this year’s tax information from Ted Stacey very helpful

(He’s the Director of Tax Services  at Bourgeois Bennett, LLC)

Watch story here

1. Hurricane Gustav losses – Since policy deductibles increased substantially since Katrina, most Gustav or Ike losses will not be covered by insurance. The good news is that your Gustav loss in excess of $100 is deductible as a casualty loss. Even better news is that you will be able to deduct that loss even if you do not itemize, thanks to a new law.

2. Real estate taxes – Taxpayers who do not itemize will still be able to deduct their real estate tax up to a maximum of $500 ($1,000 for a joint return). This is also new for 2008.

3. Louisiana – homeowners insurance premiums – Louisiana is allowing you to claim a credit of 7% of the amount you paid for homeowners insurance in 2008 on your primary residence. Condominium insurance and tenant homeowners insurance also qualify. You must reduce the premium by the Louisiana Citizens assessment (which is already allowed as a credit) and the cost of any rider for jewelry, antiques, etc.

4. First-time homebuyers – If you bought a principal residence in 2008 after April 8th, you may qualify for a credit of up to $7,500 on your federal return. Unfortunately, you have to pay the credit back over 15 years, beginning in 2010.

5. Economic stimulus check – If you didn’t get an economic stimulus check in 2008 because you filed your 2007 return after October 15th or you had too much income in 2007 to qualify, you have a second chance. You may qualify for a recovery rebate credit on your 2008 return, based on your 2008 income.

Other Deductions

 Automobile mileage – Most taxpayers know that they can deduct automobile expenses related to the business use of their automobile, but not all realize that they can also claim a deduction when they use their car to receive medical care and to perform charitable work.   For medical use, they can deduct 19 cents per mile for driving through June 30, 2008 and 27 cents per mile for the second half of the year, through December 31, 2008.   For charitable use, they can deduct 14 cents per mile for the whole year.   Don’t forget to include parking.

Medical expenses – If you have enough medical expenses to deduct them, don’t forget. You can include the medical expenses of your spouse and dependents. If you used a credit card, you deduct the expenses in the year you charged them, not the year you paid the card debt. You can deduct the cost of your health insurance. This includes the premiums for Medicare Part B and Part D, dental care policies, policies for replacement of lost or damaged contact lenses and long-term care insurance.  If you have to travel out of town to receive medical care, you may be able to deduct your meals and lodging. You can deduct the cost of your annual physical examination, even if you are not ill. Remember that you must reduce deductible expenses by any reimbursements received.

Charitable contributions – In addition to deducting your automobile use for charitable work, don’t forget to deduct your out-of-pocket expenses as well. Finally, you can still deduct the value of property you donate to charities, but the property must be in good condition or better. Keep a detailed list of the items donated (not just “three bags of clothes” and don’t be aggressive valuing them. Charity thrift shops sell clothes for as little as $5 a piece.

 Sales taxes – You can deduct the higher of your state income tax or sales tax. You can deduct your actual sales tax paid or use IRS tables. If you use the tables, you can add the sales tax paid on cars, boats, homes and home building material.

Home mortgage interest – Don’t forget you can deduct the following – The interest on your principal residence home mortgage if the money was borrowed to acquire or renovate the house.  You can also deduct the mortgage interest on a second home, including a boat if it has a galley, head and sleeping facilities. Finally, you can deduct the interest on a home equity loan of up to $100,000 regardless of what you used the money for.

Miscellaneous itemized deductions – Miscellaneous itemized deductions are deductible to the extent the exceed 2% of your income. If they do, don’t forget to include. The cost of preparing last year’s return.  Investment expenses.  The cost of your safe deposit box. Your unreimbursed employee business expenses.

And be sure you check out important information from the IRS here

3 Responses

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