5 Ways
of When and How
to Take Tax Deductions
Tax
time can be full of stress as consumers struggle to determine
what forms to fill out and what deductions to make. Even with
the help of an accountant, consumers can still become one huge
ball of nerves. In their November issue, Mutual Funds Magazine
helps to unravel that large ball by explaining key strategies
when taking tax deductions.
Mutual Funds Magazine
offers the following tips:
Medical Expenses
-- The two limits to this deduction are that it is only applicable
to medical bills that have been paid and only for the portion
that tops 7.5% of your adjusted gross income (AGI). With those
in mind, the deduction for medical expenses is best for people
with a modest income and large medical bills - on which they
make regular payments.
Charitable Contributions
-- Instead of making charitable donations in two separate years,
lump the charitable sum into one year and mail the check before
the end of the year to be able to make this deduction. Donations
must not exceed 50% of AGI.
Personal Interest Deductions
-- The interest on personal loans can be a doozy especially when
paying taxes. The only possibility in making a deduction is that
if you own a house, you can use money from you home-equity loan
to pay off your personal loans.
State and Local Taxes
-- Another alternative when itemizing deductions is to pay both
property taxes and the 4th quarter installment of year 2000 estimated
state and local income taxes BEFORE the end of 2000. The deductions
are worth more to you this year and if you are in a lower federal
tax bracket next year, this will lower your tax.
Other Itemized Deductions
-- Try bunching nonmedical, miscellaneous expenses together.
If they, in aggregate, exceed 2% of your AGI then they are deductible.
Speed up or postpone deductions into a year where they will surpass
the 2%.
The article, entitled
"Some Clever Deductions," is in the November
issue of Mutual Funds magazine available on newsstands.
Editor's Note: Mutual
Funds Magazine, a publication of Time Inc, is the fastest-growing
personal finance publication with a rate-base circulation of
800,000 and total readership of 2.8 million.
