Confused about which credits and deductions you can claim on your
2013 tax return? You're not alone. Here are six tax breaks that you
won't want to overlook.
Small Business Accounting Solutions LLC serves Milwaukee, Waukesha, Brookfield WI, and Southeastern Wisconsin. Our Tax Preparation Services are done with CPA's who will work one-on-one with you to achieve your financial goals. Call us today at 262-547-6000.
1. State Sales and Income Taxes
Thanks to the fiscal cliff deal last January, the sales tax
deduction, which originally expired at the end of 2011, was reinstated
in 2013 (retroactive to 2012). As such, taxpayers filing their 2013
returns can still deduct either state income tax paid or state sales tax
paid, whichever is greater.
If you bought a big ticket item like a car or boat in 2013, it might
be more advantageous to deduct the sales tax, but don't forget to
figure any state income taxes withheld from your paycheck just in case.
If you're self-employed you can include the state income paid from your
estimated payments. In addition, if you owed taxes when filing your
2012 tax return in 2013, you can include the amount when you itemize
your state taxes this year on your 2013 return.
2. Child and Dependent Care Tax Credit
Most parents realize that there is a tax credit for daycare when
their child is young, but they might not realize that once a child
starts school, the same credit can be used for before and after school
care, as well as day camps during school vacations. This child and
dependent care tax credit can also be taken by anyone who pays a home
health aide to care for a spouse or other dependent--such as an elderly
parent--who is physically or mentally unable to care for him or herself.
The credit is worth a maximum of $1,050 or 35percent of $3,000 of
eligible expenses per dependent.
3. Job Search Expenses
Job search expenses are 100percent deductible, whether you are
gainfully employed or not currently working--as long as you are looking
for a position in your current profession. Expenses include fees paid to
join professional organizations, as well as employment placement
agencies that you used during your job search. Travel to interviews is
also deductible (as long as it was not paid by your prospective
employer) as is paper, envelopes, and costs associated with resumes or
portfolios. The catch is that you can only deduct expenses greater than
2percent of your adjusted gross income (AGI).
4. Student Loan Interest Paid by Parents
Typically, a taxpayer is only able to deduct interest on mortgages
and student loans if he or she is liable for the debt; however, if a
parent pays back their child's student loans the money is treated by the
IRS as if the child paid it. As long as the child is not claimed as a
dependent, he or she can deduct up to $2,500 in student loan interest
paid by the parent. The deduction can be claimed even if the child does
not itemize.
5. Medical Expenses
Most people know that medical expenses are deductible as long as
they are more than 10 percent of AGI for tax year 2013. What they often
don't realize is what medical expenses can be deducted, such as medical
miles (24 cents per mile) driven to and from appointments and travel
(airline fares or hotel rooms) for out of town medical treatment.
Other deductible medical expenses that taxpayers might not be aware
of include: health insurance premiums, prescription drugs, co-pays, and
dental premiums and treatment. Long-term care insurance (deductible
dollar amounts vary depending on age) is also deductible, as are
prescription glasses and contacts, counseling, therapy, hearing aids and
batteries, dentures, oxygen, walkers, and wheelchairs.
If you're self-employed, you may be able to deduct medical, dental,
or long term care insurance. Even better, you can deduct 100 percent of
the premium. In addition, if you pay health insurance premiums for an
adult child under age 27, you may be able to deduct them as well.
6. Bad Debt
If you've ever loaned money to a friend, but were never repaid, you
may qualify for a non-business bad debt tax deduction of up to $3,000
per year. To qualify however, the debt must be totally worthless, in
that there is no reasonable expectation of payment.
Non-business bad debt is deducted as a short-term capital loss,
subject to the capital loss limitations. You may take the deduction only
in the year the debt becomes worthless. You do not have to wait until a
debt is due to determine whether it is worthless. Any amount you are
not able to deduct can be carried forward to reduce future tax
liability.
Are you getting all of the tax credits and deductions that you are
entitled to? Maybe you are...but maybe you're not. Why take a chance?
Make an appointment with us today and we'll make sure you get all of the
tax breaks you deserve.
We at Small Business Accounting Solutions LLC, work closely with small business owners in Milwaukee, Waukesha, Racine and Washington counties. As a "one-stop-shop", we provide our clients with complete Accounting services, Business and Individual Income Tax preparation, Payroll services, Quickbooks training and more!
Small Business Accounting Solutions, LLC
1025 S Moorland Road Suite 500
Brookfield, WI 53005
Phone: (262)547-6000
http://www.sbasgroup.com
