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Three Commonly-Missed Tax Deductions
By Darrin Mish of Law Offices of Darrin Mish
It is depressing to know that yearly, people do not take all the deductions that they can legally claim simply because they don't know that these exist. More often than not, they only learn about these deductions soon after they have filed the return while in the middle of a conversation with a friend or co-worker. This scenario is normal taking into account the number of deductions that are available and the different tax laws to keep track of. What is more discouraging is the fact that people normally try to claim deductions that are outrageous, such as those related to donations of body parts. Still, there are many deductions that are left untapped and this article discusses three of them. First, be sure that you reflect in your tax return any donation, other than cash, given to a charitable institution. This includes those items that were paid using your credit card. Bear in mind that the deduction should be claimed on the year the donation was made, and not when the credit card charge was fully paid. Make sure that the charity gives you a receipt that will reflect the donations that you have given them. For charged transactions, you can also ask your credit card company to give you the necessary record. Bear in mind as well that donations of actual items follow the same guideline. Hence, deciding to donate furniture and old clothes is certainly a good idea as you'll be entitled to a tax deduction on this, to some extent. Just don't forget to get proof of the donation so you don't have any trouble supporting your claim and getting the necessary deduction. Lastly, make sure that all items given to a non-profit organization are in good condition, otherwise, your application for the necessary deduction will be denied. You will also be able to get a deduction on a certain percentage of the amount that results from a home refinance. For instance, if you refinanced your home on June 1st and refinanced it for a 20-year term, then after doing the simple math, seven of those 240 months will be after December 31st. Now, if your new points caused you to have to pay $2,400, then you can actually deduct $70 for that year, in other words, $10 per month for each of those seven months. You will be authorized to deduct around $20 for each year until all of that $2,400 or all of those points have been completely deducted. Here is one that many people miss simply because there are special criteria that must be met in order to take the deduction. As soon as you fulfill certain requirements, you can actually deduct your health insurance premiums from your total taxable income. Depending on how old you are, you may be able to deduct health insurance premiums that you end up paying. This stipulation even includes premiums related to long-term care. The trick is that you should add these to your total account of medical expenses. That full amount should also be over 7.5% of your AGI, your adjusted gross income, before you will be able to claim the deduction or tax benefit. |
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