Many taxpayers overlook the long list of deductions that they may take when completing and filing their tax returns. The IRS has estimated that millions of taxpayers overpay their taxes each year mainly because they fail to avail themselves of all of the possible deductions. The tax professionals at the Thorgood Law Firm can help ensure that all taxpayers take advantage of any and all deductions that may apply to them. Here is the fourth part of our multi-part blog on the most overlooked tax deductions:
HEALTH, CHILD CARE, AND CHARITY DEDUCTIONS
Deduction of Medicare Premiums for the Self-Employed
Self-employed individuals who continue to operate their own businesses after qualifying for Medicare can deduct their Medicare Part B and Medicare Part D premiums, plus the cost of supplemental Medicare policies or the cost of a Medicare Advantage plan, regardless of whether or not he or she itemizes. These premiums are also not subject to the 7.5% of adjusted gross income (AGI) test that applies to itemized medical expenses for taxpayers 65 and older. However, taxpayers can’t claim this deduction if eligible for coverage under an employer-subsidized health plan offered by either another employer (if in addition to self-employment) or a spouse’s employer.
Child-Care Credit
A credit is available for the costs of care for a qualifying individual to work (or even look for work). The dollar limit on the amount of the expenses that a taxpayer may use to figure the credit is $3,000 for the care of one qualifying individual or $6,000 for two or more qualifying individuals. The amount of the credit is between 20 and 35 percent of allowable expenses. The percentage used depends on the amount of a taxpayer’s AGI.
Out-of-Pocket Charitable Deductions
Out-of-pocket costs incurred while working on behalf of a charitable organization are deductible. If a contribution is more than $250, some documentation and acknowledgement from the charity is necessary to substantiate this deduction. Also, don’t forget to deduct any travel expenses incurred for this purpose.
If you live in the New York or the Tri-State area and have any questions about any possible tax deduction, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
