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Tax

Take Advantage of Miscellaneous Deductions

A tax deduction reduces the amount of your taxable income and generally reduces the amount of taxes you may have to pay. If you are able to itemize your deductions on your tax return instead of claiming the standard deduction, you may be able to claim certain miscellaneous deductions. Here are some things you should know about miscellaneous tax deductions:

Deductions Subject to the 2 Percent Limit. You can deduct the amount of certain miscellaneous expenses that exceed 2 percent of your adjusted gross income. Deductions subject to the 2 percent limit include:

      • Unreimbursed employee expenses such as searching for a new job in the same profession, certain work clothes and uniforms, work tools, union dues, and work-related travel and transportation.
      • Tax preparation fees.
      • Other expenses that you pay to:

1. Produce or collect taxable income,

 

      2. Manage, conserve, or maintain property held to produce taxable income, or

 

    3. Determine, contest, pay, or claim a refund of any tax.

Examples of other expenses include certain investment fees and expenses, some legal fees, hobby expenses that are not more than your hobby income and rental fees for a safe deposit box if it is not used to store jewelry and other personal effects.

Deductions Not Subject to the 2 Percent Limit. The list of deductions not subject to the 2 percent limit of adjusted gross income includes:

  • Casualty and theft losses from income-producing property such as damage or theft of stocks, bonds, gold, silver, vacant lots, and works of art.
  • Gambling losses up to the amount of gambling winnings.
  • Impairment-related work expenses of persons with disabilities.
  • Losses from Ponzi-type investment schemes.

Qualified miscellaneous deductions are reported on Schedule A, Itemized Deductions. Keep records of your miscellaneous deductions to make it easier for you to prepare your tax return when the filing season arrives.

There are also many expenses that you cannot deduct such as personal living or family expenses. Call us today if you have questions about miscellaneous deductions.

Asset Protection Financial Planning

Financial Planning Dos & Don’ts

During times of economic turmoil, planning for your financial future can be a challenge. With that in mind here are some suggestions that offer you peace of mind and also simplify your life.

  • At least once a year, write down your investment goals and what strategies you will use to achieve them. Writing it down will help keep you focused.
  • Instead of giving money to several different charities, pick one or two that are important to you, and give a larger amount of money to each one. This type of directed giving not only makes more sense, but also makes it easier to track your donations at tax time.
  • Inventory your household possessions. the best way to do this is to make a list and then document your possessions using a camera or video camcorder. Keep your inventory in a safe place such as a safe-deposit box. An inventory will help you in the event you need to submit a claim to your insurance company.
  • Use one insurance agent and one financial advisor for your transactions.
  • If you have doubts about entering into a transaction, don’t do it. You will probably save yourself money, time, and aggravation.
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