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Common Tax Problems and How to Solve Them

For the majority of taxpayers, having to deal with the IRS can only mean that they are in trouble. Even when it sounds worse than it is, there are some very common tax problems that we might have to deal with if we’re not careful. However, having a tax professional on our side is the best way to solve these problems. If you are going through any of this, get in touch with us and we’ll go over your situation.  

One of the most common tax problems is having past-due tax returns that we haven’t filed yet. Being unable to pay the backtaxes and penalties we might have accrued is quite common, too. In more serious cases, the IRS might levy our bank account. Also, having an IRS officer wanting to meet with us can only mean we are in trouble. Nevertheless, remember that all these situations can be easily solved if we work with the right tax professional.  

Past-Due Tax Returns 

One of the most common tax problems we might be facing is having past-due tax returns. Everyone’s situation can be different, and whether you forgot to file, or just didn’t have the time, this has to be addressed as soon as possible. Since we are subject to penalties and interests, acting urgently is quite important. Once we file our past-due returns, looking for a payment plan is the next step. In order to get a payment plan that works for you, get together with your tax consultant and have them work something out.  

Backtaxes and Penalties that Can’t Be Paid 

If we failed to submit our tax return for any number of years, chances are we accrued penalties and interests. This can also be the case if we filed our tax return after the IRS due date. Being able to pay back the penalties, interests, and any owed taxes can be difficult. One way to solve this problem is requesting an Offer in Compromise from the IRS. After they evaluate our financial situation, we might be placed in a Currently Not Collectible status.  

Levied Bank Account 

In some cases, the IRS might levy our bank account in order to collect a balance we might owe them. This means that they either placed a hold or a freeze on our account as an attempt to collect a debt. If this is the case, we will receive a notice by the IRS so we can be aware of the situation. In order to get rid of this levy, we will have to pay off any outstanding balance we might have. However, if we can’t cover such debt, we could request a payment plan. We might also submit a financial hardship waiver, and avoid a bank account levy.  

IRS Officer Wanting to Meet 

One of the least common tax problems, though, is having an IRS officer wanting to meet with us. When they come to our home or workplace, it means that we have become a priority for the IRS. Thus, we should not hesitate and finding a professional tax consultant to help us is a must. If the IRS officer gets to contact us, just take their contact information. A tax advisor should take care of the matter for you. This in order to make sure an arrangement can be made.  

Are You Required to File an Income Tax Return?

We are in the middle of tax season, and while some have already taken care of it, some might still be wondering if they are required to file an income tax return. Now, we need to be aware of the consequences that might come if we fail to file our income tax return. Also, we must figure out whether we are required to do so or not, and what it depends on. This way, we can take advantage of the time we have left to submit such report and avoid any penalty.  

There are three main aspects that will determine whether we are required to file an income tax return or not. Such include our gross income and our filing status, as well as our age. Another reason why you would want to file your taxes is if you want to claim a tax refund. Remember to consult with a professional tax preparer to consult your particular situation.  

Gross Income and Filing Status 

One of the main aspects that determine if we are required to file an income tax return is your annual income and your filing status. There are different income thresholds we should go over, which vary per status. To begin with, if we are to file as a single person, our income threshold is $12,000. If we made less than that throughout the year, we are not required to file an income tax return. This is because, for the tax year 2018, the standard deduction for single tax payers is for that amount.  

The threshold for taxpayers who are married filing jointly is $24,000, and $5 for married taxpayers filing separately. If we are filing our taxes as a head of household, the threshold then goes down to $18,000. For those who decide to file their taxes as qualifying widow or widower with dependent child, the threshold goes up again to $24,000.  

Income of Taxpayers 65 or older 

Another aspect that will help us determine if we are required to file an income tax report is our age. If we turned 65 during 2018, our threshold will also change depending on our filing status. For example, single taxpayers 65 or older have an income threshold of $13,000. If we go for married filing jointly, we will qualify for one of two different thresholds. If only one spouse is 65 or older, the threshold is $25,300, but if both are 65 or older, it goes to $26,000. 

The head of household status also depends on age, allowing for a threshold of $19,600 if we’re 65 or older. Besides, a threshold of $25,300 applies for those who file as qualifying widow or widower with dependent child.  

Claim a Tax Refund 

There are some taxpayers who may not be required to file an income tax return but might want to. If your employer withheld federal taxes for your paycheck, you might qualify for a refund. For example, if your annual income was less than the $12,000 standard deduction, you are eligible for a tax refund. This means that, if your employer withheld $500 of federal taxes, you are entitled to receive that money back. In order to be able to receive such a refund, you are required to file an income tax return, regardless of your income. This is because the IRS won’t automatically issue any refunds, and needs to receive the corresponding tax report.  

If you worked as a freelancer or self-employed during 2018, you might want to read this article instead.

Tax Tips for Homeowners to Keep in Mind this Season

Being a homeowner comes with many benefits and a rewarding feeling of achievement and security for us and our family. There are also many responsibilities that come from buying our own house, including paying our corresponding taxes. However, we might be able to qualify for several deductions and credits, which is why we decided to share four useful tax tips for homeowners that you should keep in mind during this tax season.  

One of the most useful tax tips for homeowners includes deducting our moving expenses. If we suffered from casualty losses, we might be able to deduct some expenses, too. Deducting our mortgage interests and mortgage taxes is another great tip. And for those freelancers who use their home as their office, some expenses could be deducted, too.  

Moving Expenses 

Moving to a new location tends to come with many expenses that we must consider beforehand. In addition, the hassle of actually moving our belongings, packing, unpacking, arranging, and rearranging isn’t nobody’s favorite. Luckily for us, though, some moving expenses are deductible on our income tax return. There are, of course, some requirements we must meet in order to be eligible for this deduction. There must be a certain distance from our current workplace to our previous house and the new one to qualify. Having worked full-time for at least 39 weeks of the year is another requirement.  

Casualty Losses 

As homeowners, taking care of our property is one of the most important priorities. Making sure it is in good shape is a must. However, unforeseen events can happen, and sometimes these events end up causing great damage to our houses. If we were victims of vandalism or a natural disaster, for example, we might be able to deduct some losses. However, the IRS defines a casualty as an unusual, unexpected, or sudden event.  

Mortgage Interests 

Being able to deduct our mortgage interests is one of those tax tips for homeowners that we should keep in mind if eligible. Even when the Tax Cuts and Jobs Act modified the deduction, we are still able to benefit from it. We can deduct the interest of any residence loan that goes up to $750,000 if we obtained this loan after 2017. For loans obtained before that year, the limit of the loan goes up to $1,000,000. Also, we should remember this can apply for our first and second mortgage, in case we have more than one.  

Home Office 

Last but not least, there is another great deduction that some of us could take advantage of if we work from home. If we are starting or running our own business, using a part of our house to do so will save time and money. Also, the expenses and costs that our house generate as a result of business activity can be deductible. However, we must be self-employed to enjoy this benefit. Because of the TCJA, employees of an established company can’t deduct home office expenses.  

Tax Checklist for Small Businesses: Five SMB Essentials

Tax season has officially begun, and every business owner should start preparing to file their corresponding taxes. With millions of small and medium businesses starting every year, having a clear and simple tax checklist for small businesses should be of great help for everybody. Whether you are filing your taxes on your own or working with a tax consultant, these are five essentials we can’t forget about.  

To begin with, we should always make sure all our personal and business information is correct and mistake-free. Also, depending on the structure of our business, different tax forms will apply. Preparing your bookkeeping documents beforehand will make the job of your tax professional easier. For those who work from home, understanding home office deductions is key. Going over any other deduction eligibility will ensure we maximize our tax return, too. These are five essential tips for a useful tax checklist for small businesses.

Double Check Your Information 

One of the most essential items that must be on the top of any tax checklist for small businesses is checking your information. When filing our company’s taxes, make sure your legal name, social security number, address, and legal business name are correct. We must also confirm our Employer Identification Number is properly written, too. Any typos or mistakes could cause a significant delay in our refunds, and that’s the last we want.  

File the Correct Form 

Depending on the structure of our business, different forms will be required by the IRS. That’s why it is extremely important that we make sure we are filing the corresponding form for our company. Sole proprietors and single member LLCs on Schedule C will file the Form 1040 Individual Income Tax Return.  

Partnerships and multi-member LLCs should report their income and expenses using Form 1065. Form 1120-S is used by S Corporations. Plus, shareholders of any partnership, LLC, or S Corporation will receive a Schedule K-1 with the company’s income, deductions, and credits.  

Remember to double check with your tax professional before filing or issuing any form. They will help you make sure your company is using the right one.  

Prepare Your Bookkeeping Documents 

Having your bookkeeping records ready on a timely manner will make it easier for you and your tax preparer to get your tax return ready. When we take care of our bookkeeping in advance, we can end up saving a lot of money on service fees. Besides, tax preparers can work on submitting your taxes sooner rather than later. This can only mean that we will receive our tax refund sooner, too.  

Understand Home Office Deductions 

When we use our home as part of our business facilities, we qualify for some home office deductions. However, we must be fully aware of how such deductions work before going any further. The IRS has a list of instructions to follow when filing home office deductions under Form 8829. If we are eligible, we will need to get the square footage of our entire home, and the part that we use for home office. Then, we need to calculate the percentage of all the expenses and multiply it by the percentage of space used for our business.  

Go Over Your Deductions Eligibility 

Many companies are eligible for many different deductions, including vehicle use, health insurance premiums and medical charges, etcetera. Other examples of business deductions include costs of supplies, depreciation, utilities, traveling, and advertising.  

Each deduction will come with different instructions and requirements of eligibility. You can always refer to the IRS website to get more details on business deduction eligibility. However, if you are working with a professional tax preparer, they should be able to guide you through this.  

4 Useful Tips to File Your Taxes Online

Trying to file our taxes as soon as possible requires careful planning and a decent amount of time. However, the Internal Revenue Service (IRS) made available an online tool that has made the process easier and faster. During the last two decades, there has been a significant increase in e-filing. Last year, 92% of taxpayers chose e-filing for their tax return. Thus, we are bringing four useful tips to file your taxes online in case you need some help on this effective and simple process.  

When you work with a professional tax assistant, you don’t really need to worry about the process. However, if you are doing this on your own, these tips might be of great help. First, you need to do your research and learn about the dates for filing. After that, you should sign up with the IRS for your direct deposit payment. Only then you might continue and actually submit your taxes through the IRS website. Lastly, you just need to sign off your tax return and wait until you receive your deposit. We hope these tips to file your taxes online makes the process simpler and easier for you.  

Know the Dates and Don’t Miss Them 

One of the most important tips to file your taxes online include knowing the relevant dates and not missing them. Earlier this month, the IRS announced that the tax filing season will begin on Monday, January 28th, 2019. The due date to file your tax returns is by midnight of April 15th, 2019. This date only changes to April 17th for residents of the states of Maine and Massachusetts. We should also remember that we should apply for an extension around March if we think we will need one. 

Sign Up for Direct Deposit Payment 

Another important step to take when filing our taxes online is signing up for your direct deposit before actually filing. This will help you ensure you receive your refund sooner rather than later. When opting for a direct deposit instead of a physical check you won’t have to worry about having the check lost or stolen. You can go to the IRS website and visit their Refunds section or have your tax preparer do it for you.  

E-File Your Taxes through the IRS Website 

Once you’re on the IRS website, you can go to their e-filing portal and start the process. They also have an article with different tips to file your taxes online that might be worth checking first. Taxpayers with an adjusted gross income of $66,000 or less have the option to use the IRS system to file their taxes. For those with an AGI over such figure, the IRS will direct you to a certified service for e-filing.  

Sign Off Your Tax Return 

The last step of e-filing online is signing off your tax return using one of their many electronic signature options. The IRS has available two signing options, both through the use of a Personal Identification Number, or PIN. First, taxpayers have the option of using the AGI figure or PIN number from the year before. For the second option, the taxpayer and their tax preparer need to sign the tax return. Then, the IRS will generate a signing authorization request they must confirm later on.  

The Internal Revenue Service has done an excellent job in simplifying and perfecting their online filing systems. This is why, every year, millions of taxpayers decide to go through this simple and easy process. We hope these tips to file your taxes online are useful and help you completing your e-filing process for this season.  

4 Useful Tax Tips for Filing Season 2019

The Internal Revenue Service announced that the 2019 Tax Filing Season will begin on Monday January 28th. This should give us a couple of weeks to start preparing and gather our papers and any other documents we might need. This is why we have decided to gather four useful tax tips for filing season 2019. We hope these tips will help you stay on top of your income tax return and let you be as ready as possible for when the time of filing comes.  

Since we have until April 15th to submit our 2018 tax returns, we should take our time and do some research. There have been changes and updates on tax laws, and it´s always better to stay up to date with them. Also, checking on your tax withholding is a strategy that tends to be left aside. Considering all our deductions can help us reduce the amount of time we spend preparing our files. Keeping track of our state income tax can also save us time and money and avoid having a not-too-pleasant surprise.  

Do Your Research 

One of the most important tax tips for filing season 2019 is trying to take a fresh look at our taxing situation. There were several changes to current tax laws regarding thresholds and brackets. So, the best approach this year, is to avoid assuming we qualify for a given break and do our research instead. 

When it comes to tax credits, deductions, withholds, and even state income tax, the more accurate we are, the better. Therefore, we should take advantage of the time we have before tax season begins and do our homework. Confirming whether we qualify for a credit, deduction, bracket, etc., will help us save time and money this year.  

Remember to Check your Tax Withholding 

Keeping track of our tax withholding is always a good idea. This is particularly true at the beginning of the year and when tax law changes. If we work for a company, most likely our employer withholds a part of your salary and pays it to the IRS. This way, you receive a smaller paycheck, but your income tax is taken care of.  

However, we should be aware of how much they are withholding, or if they are at all. This will help us calculate our tax return more accurately when filing comes. If our employer withholds too little, we might be subject to a higher tax bill. If they are paying too much, however, we might have to wait until our refund check arrives.  

Consider Your Deductions 

Most taxpayers tend to struggle when deciding to itemize their tax deductions or going for the standard one instead. Because of the changes on tax laws, with almost doubled the standard deduction, we need to consider our options more carefully.  

If we hadn´t itemized our deductions before, we might want to consider this possibility this year. However, if we had been itemizing them, we should take a deeper look into this possibility. We want to make sure that itemizing makes sense financially, and that we will benefit from it.  

Keep Track of Your State Income Tax 

Last but not list, one of the most useful tax tips for filing season 2019 is keeping track of our state income taxes. There are many reasons why we should do the necessary research regarding what happens in our state. For example, there are many states that have independent tax systems. This means that not every state will reflect tax law changes that happen in a federal level.  

This year’s tax season will be a bit different for the majority of us. We need to make sure we are ready for those changes. Therefore, the best way to stay ahead of the taxing game is with the support of a professional tax broker or tax consultant. This way, we’ll be able to make the most out of our income tax and start a new year with the right foot.  

Fraud Threats to Financial Institutions: A Constant Online Struggle

During the last couple of years, the interaction between financial institutions and their customers has become more digitized than ever. Online services, requests, and applications are key aspects of an enjoyable and memorable customer experience. However, the process of online identity verification has brought several fraud threats to financial institutions, which represent a significant risk for institutions and customers.   

Back in June 2018, the credit reporting agency TransUnion hired the research company Forrester Consulting to carry out a study regarding fraud threats to financial institutions. During August and September, Forrester conducted a survey that 153 institutions from the US, Canada, and India responded to online. The results of the survey showed that fraud against financial institutions is increasing at an alarming rate. It also showed that financial institutions lack tools and strategies to tackle fraud. Besides, finding an effective solution without mitigating the customer experience is the main goal of financial institutions.   

Fraud Threats to Financial Institutions Have Increased  

Fraudulent activity has increased within the financial industry. Thanks to the digitization of processes and information, new fraud threats to financial institutions have risen. According to Forrester’s survey, 94% of the firms have experienced some type of fraud. The most common types of fraud include identity theft, new account fraud, synthetic identity fraud, and account take over fraud.   

The study also found several tendencies that are having an influence on fraud threats that financial institutions experience. First, behaviors and expectations of customers have changed, which forces companies to provide remarkable and memorable experiences. 70% of the firms mentioned that they interact with their customers online more than face-to-face.   

Also, the fact that fraudsters are keeping up with technology enables them to outsmart security systems and surveillance strategies. Almost 70% of the firms mentioned that they feel one step behind fraudsters.   

Lastly, this survey also revealed that financial institutions don’t seem to be equipped with the necessary tools to tackle and unarm the most advanced fraudsters. Thus, more than 50% of the firms stated that their security systems are not effective enough to fight fraud properly.   

Challenges that Financial Institutions Face Against Fraud Threats  

Besides these complex dynamics, there are several challenges that financial institutions face when trying to fight off fraud threats. TO begin with, the current systems financial institutions use lack essential capabilities to combat fraudsters. More than 50% of the firms stated that they do not have access to the tools they’d like to, such as real-time insights. They also mentioned that the current tools they do have access to don’t support multi-channel protection. Missing analytics capabilities like machine learning, predictive analytics, and social media analytics make them vulnerable, too.   

Another significant challenge is the difficulty of accurately and efficiently detecting and mitigating fraud altogether. According to the survey, 92% of the firms stated that they experience several issues when trying to remain compliant and respond to real-time alerts.   

The fact that their current fraud solutions rely on inaccurate data to try to prevent and mitigate fraud has become an issue, too. This is because fraud detection and identity verification vendors do not meet the firms’ expectations. Having issues with costs, support, and quality of service is another challenge institutions must work with regularly.   

Key Recommendations to Tackle Fraud Threats to Financial Institutions  

Even when the current situation regarding fraud to financial institutions has become difficult to manage, Forrester’s survey provided several key recommendations to manage such threats more effectively.   

One important recommendation is to understand the importance of high-quality data and its sources. Having a fraud detection system that relies on quality data will reduce fraud risks significantly.   

The quality of our fraud prevention strategies and decisions can benefit greatly from using consortium data. All the information our company generates from fraud management attempts can be useful to prevent fraudulent activity in the future.   

The importance of choosing the right vendor to manage and design our fraud prevention strategies is another key aspect. We need to make sure that our vendors will provide high-quality data, and that have documented and proven security services. This way we’ll know that our company is collaborating and being protected by the right partner.   

Crypto Taxes: What You Need to Know about Cryptocurrencies and Taxation

The concept of cryptocurrencies and crypto investment has been around for a couple of years now. It is so that we have seen a continuous increase in mainstream investments and crypto transactions recently. However, we need to start thinking about the crypto taxes and liabilities that come from investing in currencies such as bitcoin, ethereum, and others of the like. This is still a gray area that might confuse people, whether they are investing or not. 

The very first thing we need to consider is that cryptocurrencies are indeed taxable. This means that crypto taxes will apply. Nevertheless, we must remember that the IRS sees cryptocurrencies as property, not as dollars or cash. Therefore, crypto taxes will apply for capital gains or losses, depending on our particular case. This means that, just as with any other property, we need to keep track of each crypto transaction.  

Cryptocurrencies Are Taxable 

Since 2014, the Internal Revenue Service made available its official guidance document regarding crypto taxes. This means that, for the IRS, cryptocurrencies do generate tax liability. However, we must note that cryptocurrencies count as property, not as actual currencies or dollar amounts. The IRS has been focusing more on crypto transactions than they did before. Failing to pay our crypto taxes still constitutes tax fraud. This can result in a minimum sentence of 5 years in prison or having to pay a fine of up to $250,000. 

Cryptocurrencies Count as Property 

As we mentioned above, the IRS counts cryptocurrencies as property, just as stocks or real estate. This means that you will have to pay taxes on it if there has been a capital gain. However, if you have taken any kind of loss, you might be able to get a lower tax bill.  

It is important that we keep track of each and every one of our crypto transactions as accurately as possible. Recording when we buy cryptocurrencies, how much we paid, when we sold them (if we did), and what we received for it is essential. This way we’ll be able to properly calculate whether we had a gain or a loss.  

Keep Record of Each Crypto Transaction 

Keeping record of each and every one of our crypto transactions is essential. This will help us calculate our investment and allow us to properly file our crypto taxes report. Besides, having a complete and detailed log will help us avoid miss a transaction. Even when involuntarily, it could count as tax fraud, and the consequences are severe. As a result, we recommend hiring the services a professional tax consultant. This way, we will be able to maximize our refund and avoid having to pay a fine.  

3 Types of Tax Credits You Might Want to Know About 

Last week we talked about some really useful tax deductions you might be able to take advantage for during the upcoming tax season. This week, we´ll be discussing 3 types of tax credits you might also qualify for. As the year is almost over, we want to make sure you are informed and prepared for filing your income tax return next year.

There are many types of tax credits you might be eligible for, which you can find on the IRS website. However, we will be talking about three of them only. First, we’ll talk about the tax credits for people with kids. Then, we’ll go over the different tax credits for investing in education or retirement accounts. Lastly, we’ll talk about a tax credit you can get for making “green” purchases, for both residential energy and electric vehicles.

Child Tax Credit

Thanks to the Child Tax Credit, you might be eligible for up to $2,000 for every kid you have, plus $500 for each non-child dependent, too. Something to take into account is that the amount of credit you qualify for depends on your total income. For the 2018 tax year, the phase-out begins at $200,000, or $400,000 if you file as married filing jointly.

The percentage of this credit can be anywhere between 20% and 35% of your expenses related to child and dependent care. If your family’s adjusted gross income is of $15,000 or less, you qualify for the 35%. This percentage will shrink one percentage point for every extra $2,000 addition to your AGI.

Investment on Education or Retirement Credit

Another quite useful tax credit is the Retirement Saver’s Credit. This credit can be anywhere from 10% to 50% of up to $2,000 in contributions we made to a retirement account. This includes IRAs, 401(k)s, 403 (b)s, and certain retirement plans. The percentage of this credit will depend on your AGI and filing status, yet it’s a credit worth checking if your income is less than $63,000.

Another quite useful tax credit is the American Opportunity Tax Credit, which depends on qualifying education expenses of higher education students. This credit can be of up to $2,500 per student and includes tuition, activity fees, supplies, books, and equipment needed during your first four years of college. If your AGI is higher than $90,000, or $180,000 filing jointly, you might not qualify for this credit. However, parents claiming the student as a dependent might be able to take such credit, still.

Eco-Friendly Purchase Credit

There are two types of tax credits we can take for eco-friendly purchases we made this year. First, we have the Residential Energy Tax Credit, which can give you up to 30% of expenses for energy systems. This includes alternative energy equipment such as solar water heaters and solar panels.

Also, we have the Plug-In Electric-Drive Motor Vehicle Credit, which includes light trucks and passenger vehicles. The credit amount can be anywhere between $2,500 and $7,500 for having bought a plug-in electric vehicle. In order to qualify, the car must be new, as the IRS doesn’t count used or second-hand cars. Also, the vehicle must have four wheels, at least, and come with a rechargeable battery with a capacity of four-kilowatt hours as a minimum.

If you want to have more details about these or any other tax credits you might be eligible for, get in touch with us. We’ll be more than happy to answer all of your questions and give you the guidance you need.

 

 

4 Useful Tax Deductions You Should Take This Year 

The year is almost over, and most of us are starting to prepare for the upcoming tax season. The Internal Revenue Service has not announced yet when will the tax season officially begin, though. Nevertheless, being prepared for when it does can save us a lot of time and effort when filing our income tax return. Having that in mind, we might want to look at the many tax deductions available that could help us get a lower taxable income.

There are many different types of tax deductions available for us. Each of them, of course, comes with their corresponding requirements. However, we are including 4 useful tax deductions that could help most of you reduce your taxable income. Such deductions include student loans, retirement plans, theft loses, and medical expenses.  Here is how you can take advantage of each of them if they apply to you.

Student Loans and Education Expenses

Dealing with student loans, interests, and other education expenses can be quite stressful for many of us. The good thing is that these expenses can qualify as tax deductions we can take advantage of. For the year 2018, you can deduct up to $2,500 in interest on your student loan, as long as you’re not married filing separately.

Your adjusted gross income (AGI) has to be less than $80,000 for taxpayers filing as single, head of household, or qualifying widow. If you’re filing as married filing jointly, the AGI needs to be less than $165,000. Other education expenses include tuition, fees, room and board, books, and other supplies.

Retirement Plans

Preparing for your retirement is one of the smartest inversions one can make. Even when making contributions to retirement plans might be easier said than done for some, it will eventually pay back. These contributions can be tax deductible and might vary depending on the type of retirement plan you have.

A Simplified Employee Pension plan is for those who work as self-employed. On the other hand, an Individual Retirement Account works for employees and self-employed workers, too.

In order for these contributions to qualify as tax-deductible, they must be after-tax dollar contributions. For example, if you earn $200 and pay $45 in federal taxes, a contribution that comes from the remaining $155 can qualify as deductible.

Casualty and Theft Losses

If we decide to go for an itemized deduction instead of the standard one, we can add the costs of casually and theft losses to become tax deductible. This means that if any of our belongings were lost due to theft, vandalism, fires, storms, or can accidents, the expenses of repairing or replacing them are deductible.

In order for these costs to qualify, each loss event has a limit of $100. If we have multiple events, each must attaint to the $100 limit, too. The total of our casualty and theft losses must not include the $100 deduction per event when we calculate it. Also, there will be a reduction of 10% from our AGI before we can get the total amount of deductible expenses.

Medical and Dental Expenses

One of the best and most useful tax deductions we should definitely take advantage of is the one for medical and dental expenses. Keeping track of these expenses might be difficult, especially if we visit our GP and dentist quite often. However, having the patience to go through this definitely comes with some benefits.

In order for your medical bill to qualify as deductible, it must account for 7.5% of your adjusted gross income. Anything below this percentage will not be deductible. This means that if your AGI was of $50,000, your yearly medical bill should be of, at least, $3,750.

If you want to know more about these and other tax deductions, don´t hesitate to contact a professional tax advisor. They will be able to help you through the process and give you the guidance you need in order to maximize your deductions.