ST. CROIX INSIGHTS
The 5 Most Overlooked Personal Tax Deductions For Individuals
BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Each year, Uncle Sam comes knocking and wants more of our hard earned money. I’ll pay my fair share, but just my fair share. So I consulted Shaun Simma, CPA, of Simma, Flottemesch & Orenstein for this top 5 overlooked personal tax deductions he sees each year.
#1: Reinvested Dividends
While they’re technically not a deduction, reinvested dividends are an important subtraction on your tax return. Reinvestment of mutual fund dividends results in an increase in your tax basis within the fund. If you forget to include your reinvested dividends, you may be double taxed on those dividends.
#2: Out-of-Pocket Charitable Contributions
Out-of-pocket charitable contributions can also be written off. If you prepare a meal for a non-profit soup kitchen, for example, you can write off the cost of ingredients. Always remember to hold onto your receipts for these types of purchases, and if you contribute more than $250, you will need a document acknowledging your contributions to the charity.
#3: Deduction of Self-Employed Medicare Premiums
If you run your own business after qualifying for Medicare, you are allowed to deduct various Medicare premiums. However, you are not allowed to claim this deduction if you are eligible for coverage under an employer health plan (either your employer’s or your spouse’s employer’s plan).
#4: Estate Tax on Income in Respect of a Decedent
If you have inherited an IRA from someone, you can get an income-tax deduction for the estate tax paid on those IRA assets.
#5: The American Opportunity Credit
The American Opportunity Credit applies to all four years of college, and can get you a total annual tax credit of $2,500 for each student. In order to get the full credit, you have to have a modified adjusted gross income of $80,000 or less for individuals, $160,000 for married couples filing jointly.
It’s like forgoing free money. No one does that, do they? But we do, so together let’s put a stop to it. Just think – these are only a few simple tax strategies. I wonder how many more each year any of us can be overlooking? It doesn’t hurt to have a qualified CPA review your prior’s year tax return for items you may have missed.
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