Missing just one or two deductions can cost you a couple ofhundred bucks in some cases, and even people that are pretty wellorganized, and know the tax system pretty well still miss a coupleof deductions every year.I can’t encourage you enough to download the Schedule A, andlook at three years of tax returns while we go through thesedeductions. Make certain that you work off that in order to becertain you are getting all your deductions.Check out our daily video at www.mywealth.com/blog.It is so important that you are comfortable with your1040 and Schedules A-B ifyou are serious about understanding taxes better and maximizingyour return!Remember your 1040 is the tree trunk for the entirereturn and everything else are branches.Some braches are moreimportant to some than others.Other important schedules will depend on your businessactivities.If you are a small business owner (ScheduleC),investor(Schedule D), realestate investor(Schedule E) andfarmer (Schedule F).A good deduction to remember and I hope you never have is:Casualty and Theft Losses, in which there is a 10% floor. Casualtymeans anything unexpected like a fire while theft is pretty selfexplanatory.I had a client that had a fire in her home who saved a lot ofmoney in taxes because of this deduction.I don’t want to boreyou with all the rules because you can just ask me in our onlinecourse how this deduction works and I would be more than happy toexplain.I do however want to make certain that you are aware of the JobExpenses and certain Miscellaneous Deductions.This is an area thatis chocked full of deductions. I have included a link for theMiscellaneous Itemized Deductions, which covers, line 21-28.http://www.irs.gov/publications/p529/index.htmlThere is a 2% floor for many of these deductions.What this meansis that if you have $100k in income, then you need $2,000 in thesedeductions in order to start increasing your refund!If you had $50kin income, you would need $1k in these deductions in order to startgetting money back.Just look at line 26 of the Schedule where itasks to multiply 2% times your AGI.You can deduct only unreimbursed employee expenses whichare:·Paid or incurred during your tax year,·For carrying on your trade or business of being anemployee, and·Ordinary and necessary.There is a whole list so make certain you are familiar with it.You can print out this version of the same publication (529)and use at as a checklist.Just to mention a few: depreciation oncomputers or cell phones, subscriptions to professional journalsand trade magazines related to your work.Make certain you gothrough the list in order to maximize your return, there are a lotof themOther miscellaneous expenses subject to the 2% floor are thingslike tax preparation fees.These fees can include computer programs,periodicals and e-filing.Our course is also tax deductible sinceyou are using it for assistance with your taxes.Had to cash out your entire IRA this year? Don’tforget this deduction!Also, please note that all the investment related expenses thatare deductible such as: fees and losses from Roth IRAs andTraditional IRAs when you draw out the entire account. (I bet thereare a lot of people that miss that this year!)Schedule A line 28 and miscellaneous expenses are not subject tothe 2% floor.A lot of people out there seem to think that gamblinglosses are subject to the 2% floor and it is not.If you enjoygaming, make certain you read this section of the link that Iincluded and that you are doing your best to keep good records incase you are ever questioned.Finally, just note the last section of Schedule A line 29 andthe fact that you can get phased out and have a reduction in thedeductions on Schedule A if your income exceeds $159,950.I have no idea why you would want to itemize if your itemizeddeduction did not exceed your standard deduction.(The last line ofSchedule A, line 30) The standard deduction for 2008 for a singlefiler is $5.450 and married filing jointly is $10,900.If yourdeductions did not meet these amounts and they were higher, thentake the standard deduction but make certain that you are familiarwith the “above the line” deductions, because you canstill take advantage of them.Do you have a tax question or is there an article that you wouldlike to see written on taxes?bobrien@mywealth.comSincerely,Bob O’BrienSr. Instructor
