Tax Tip Archives
The information below is a general guideline. As always, it's best to consult with a tax professional as to how changes in the tax law affect your own situation. You may also contact me at firstname.lastname@example.org.
The cost of travel for the management or conservation of investments is generally deductible. This includes trips to the broker or financial advisor, as well as trips to look after the investment property (even if it is in FL, and you live in New England). It does not include trips to shareholders meetings, except in special circumstances such as proxy fights. No deduction is allowed for expenses allocable to a convention, seminar or similar meeting dealing with investments.
Job Hunting Expenses
Expenses of looking for a new job in a taxpayer's present line of work/business are tax deductible, even if a new job is not found. However, expenses of looking for a new job in a new trade or business are not deductible-even if one finds a job!
Substantiating Gambling Losses
Adequate records must be kept to support gambling winnings and losses. Include the following:
- Lottery: Records of ticket purchases, payment slips and unredeemed tickets Slot machines: Date, time, machine played & machine number. Record table number.
- Bingo: Number of games, ticket costs
- Horse/dog racing. Record races/bets etc.
- Keno: Copies of tickets, casino credit records.
Remember: You can only deduct gambling losses to the extent of gambling income.
Additional rules might apply. For instance, transportation, meals and lodging are not deductible for a non-professional gambler. To learn how you can obtain the maximum benefit, please give me a call.
Are you getting the "saver's credit"?
If you're not sure what the "saver's credit" is, you have company. Members of the Senate Finance Committee believe many people who are eligible to claim the credit are unaware of its existence.
- The saver's credit, also called the "retirement savings contributions credit," is a tax break designed to encourage you to make contributions to your traditional and Roth IRAs and certain other qualified retirement plans - including your 401(k).
- You apply the credit directly to your federal income tax liability, including the alternative minimum tax. It's nonrefundable, meaning you can use it to reduce your tax liability to zero, but no lower.
- The maximum credit is $1,000 ($2,000 if you're married filing a joint return).
- You're eligible if you're not a full-time student or a dependent, are over age 18, and your adjusted gross income is less than the phase-out amount of $26,000 ($52,000 for married filing jointly in 2007).
Double dipping? If you're eligible, you can take the credit and still deduct your traditional IRA contribution, which gives you the opportunity for double savings.
Additional rules might apply. For instance, the amount of the credit may be reduced by certain distributions from your retirement plans. To learn how you can obtain the maximum benefit, please give me a call.
Find Some Good Winners and maximize use of cash
Go ahead and cash in a few long term capital gains- sell your winners. Offset losses, or put more money in your cash flow. Be careful to avoid a "wash sale" by re-buying the same security within 30 days (i.e. wait at least 31 days if you do). You only have to pay tax on these gains by April 15, 2009, so you have a year's use of the gains before you ante up to the taxman.
Also remember- this year (2012), the long term capital gains rate for the lowest tax brackets is still 0%. Consider gifting appreciated stocks to an adult child (18 or older so you're not subject to expanded kiddie tax laws) or a relative living on a fixed income or low income.