The Simma Flottemesch & Orenstein team hope you’ve been gathering your receipts for tax-deductible expenses from 2018. These deductions can increase your refund or lower the amount you owe, so keep them in mind as you look back at this year’s purchases:
- Kids camps: If your children are under age 13, and you took them to a before or after-school care program, daycare or day camp during your work hours, you may be entitled to the Child and Dependent Care Credit. Overnight and sleepover camps aren’t eligible for this credit.
- Health insurance: For the self-employed, a deduction may be taken for health care premiums you pay for you and your family. If you aren’t self-employed, health insurance premiums paid after taxes, including other medical expenses, are deductible if they exceed 7.5 percent of your income and you itemize the deductions.
- Education expenses: The Lifetime Learning Credit of 20 percent of up to $10,000 of tuition and fees is available even if you aren’t pursuing a degree. You don’t have to be a full-time student to utilize this credit.
- Charitable contributions: Every contribution counts. Even small donations can add up quickly. And while you can’t deduct the value of your contributed time when you volunteer, you can deduct your travel at 14 cents per mile as well as any parking or tolls you paid.
- Medical costs: Exercise equipment, home spas and swimming pools may be tax-deductible as medical expenses if your doctor recommends their use to mitigate a medical condition.
- Mileage expenses: Do you use your vehicle for business, or to travel between multiple jobs? In those cases, you can deduct your mileage (54.5 cents per mile in 2018).
- Points paid on your home loan: When you buy a home, the points you paid are deductible in that year. Points paid to refinance a loan must be written off over the length of the loan. If you refinance again, don’t forget to write off the remaining points in the year you refinance.
- Sales and local tax deduction: If you itemize your tax deductions you are permitted to deduct either the state income tax paid or the state sales tax paid. You are free to choose the one that gives you the biggest tax deduction.
- Home office: Do you use part of your home regularly or exclusively to perform administrative or managerial activities in relation to your business? You can claim a home office deduction for a portion of utilities, rent, mortgage interest, depreciation, cleaning, etc. based on the square footage of your home that is utilized for business activities.
- Personal bad debts: If you’ve loaned money to friends or family who have failed to pay you back, you can deduct up to $3,000 of this non-business bad debt as a short-term capital loss on your tax return in the year the debt becomes noncollectable.
In the preparation of your taxes, Simma Flottemesch & Orentstein will ask you simple questions to determine what deductions are applicable to your return. The more deductions you have, the more money stays in your pocket.