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CHARITABLE
CONTRIBUTIONS
Most people know that charitable contributions of cash
can be deducted as an itemized deduction. But not everyone realizes
that you can deduct the non-cash donations, such as used clothing,
furniture, and household goods. The deductible amount is based on
the item’s fair market value.
STUDENT LOAN INTEREST
Interest paid on student loans is deductible as an adjustment to
gross income – up to $2,500 per year for as many years as it takes
to repay the loan. This deduction is subject to a phaseout depending
on your adjusted gross income.
IRA CONTRIBUTIONS
Contributions to a traditional IRA might be deductible,
depending on your age, total income, and whether you are covered by
a retirement plan through your employer.
HEALTH INSURANCE FOR SELF-EMPLOYED WORKERS
Premiums you pay to cover yourself and your family are 100 percent
deductible as an adjustment to gross income.
EARLY WITHDRAWAL PENALTY
If you incurred a penalty as the result of an early withdrawal from
a certificate of deposit or other type of time deposit savings
account, the amount of the penalty is deductible as an adjustment to
gross income.
SOCIAL SECURITY TAXES FOR THE SELF-EMPLOYED
In computing your adjusted gross income, you can deduct up to one
half of self-employment taxes paid during 2006.
HOME EQUITY LOAN INTEREST
The IRS permits you to deduct interest payments on up to $100,000 of
home equity loan debt.
MILITARY RESERVISTS
Reservists who serve more than 100 miles from home and stay
overnight are eligible to deduct non-reimbursed travel expenses.
ALIMONY
Divorced taxpayers may write off alimony expenses as an adjustment
to gross income, but not child support.
MISCELLANEOUS ITEMIZED DEDUCTIONS
There are a number of deductible expenses that fall into the
category of miscellaneous itemized deductions. These expenses are
deductible to the extent that their total exceeds 2 percent of your
adjusted gross income. The most common are listed below.
UNREIMBURSED EMPLOYEE BUSINESS EXPENSES
This category includes business expenses you incur in connection
with your job, such as dues paid to a union or professional society,
business-related travel, courses you take to improve your job
skills, professional books and journals, and work clothes and
uniforms.
JOB SEARCH EXPENSES
The money you spend looking for a job is deductible as long as
you’re looking for a job in your current line of work. You may
deduct the cost of travel (only if the trip relates primarily to
seeking a new job), resume preparation, postage, and telephone calls
– even if you don’t get the job.
INVESTMENT EXPENSES
This category of miscellaneous itemized deductions includes
investment fees, safe deposit box rental, subscriptions to
investment publications and other expenses incurred in managing your
investments.
TAX PREPARATION FEES
You can claim a deduction for fees you pay to a CPA or
other tax preparer, as well as expenses paid for tax preparation
software, tax publications, and electronic filing.
A CPA can help you determine if you have identified all of the
deductions to which you are entitled.
Brought to you by the North Carolina
Association of Certified Public Accountants in cooperation with the AICPA.
©2007 The American Institute of Certified Public Accountants |
