Allowable and Disallowable Expenses for Tax Deductions

December 19, 2011 by  Filed under: Taxes 

For people filing tax deductions, medical expenses should feature on their list of tax reductions. The Internal Revenue Service allows taxpayers to make deductions of annual medical expenses that are over 7.5% of one’s annual gross income. Medical expenses incurred from regular checkups, eye and dental checkups, and visits to the doctors qualify under this section. Mileage incurred in the medical trips should also be logged in as part of the deductions. Taxpayers who make monthly health insurance payments should make their January payments in December and sum them up with the medical expenses that qualify for deductions.

In some States, taxes on real estates are made once per year, but in other states like New Jersey, municipal taxes, county taxes, and school taxes are combined and payments done on quarterly basis. In such states, taxpayers can settle the payments due in early 2012, in December 2011.

Taxpayers who make quarterly payments of tax estimates deducting state income tax and local income tax but not state/local sales tax should consider making the payment of the quarter, which is usually due in mid January, in December. Those who expect due balances on their state income tax returns of the year can consider requesting their employer to increase their income tax withholding.

For those hoping to buy a car in the beginning of 2012 and are in a state with no income tax or decide to make state/local sales tax deductions instead of state/local income tax deductions, they should consider acquiring the vehicle in December and save the receipts for sales tax purposes.

Being charitable can also add value to one’s account. Donations made by a taxpayer, to churches, charities, or any other places, should be included in the deductions, as long as one has receipts for every donation made.

Taxpayers with monthly mortgage payments should make their January loan payments in December and ensure that the mortgage company receives those payments in December so that they can be reflected in the taxpayer’s Form 1098 for 2011.

There are work-related expenses that the IRS recognizes for tax deduction purposes. Some of these expenses include costs of new uniforms, subscriptions to work, or career related publications that expire in early 2012, purchase of work clothing and small tools. College fee for a dependant person, whether a child or spouse, also qualifies for tax deduction. However, such costs qualify only for the year they were incurred and paid for.

Rob L Daniel and partners of Limon Whitaker & Morgan, for years have helped businesses and individuals Nationwide, with their delinquent IRS & State tax problems. The firm is based in Los Angeles, California USA. / Tel:888.321.6188

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