Don't Miss These Deductions
More overlooked deductions on the menu this week. For fun we’ll focus on what those of us inside public accounting call “above the line deductions”. There are a number of reasons these are better than other kinds of deductions. You can follow the link on above the line if you want more details -- the net impact is that they are hard to qualify for, but easy to take. That’s because you don’t need to itemize to use them. While lots of people itemize, many people are better off with the standard deduction. In particular young taxpayers often fall into the category of an easier return to file, but with fewer tax breaks.
One example of how starting out is a tougher time for taxpaying is your first job search. Once you have a chosen profession, expenses for your job search can be deducted. That’s not true for your first job hunt. However - moving to take your first job is not only deductible, but you can take it even if you don’t itemize. The key qualification is that your new job is more than 50 miles away from your old home. (You may need to read that a few times to get clear on what that means.) Mileage deductions for moving have been changed. If you moved in 2011 before July it’s 19 cents. It went up to 23.5 cents for the remainder of the year.
If you own your own business and qualify for Medicare you get another deduction that doesn’t require you itemize. (Accountants love these!) You can take the full premiums for Medicare Part B, Part D and any Medigap policy you use. Unlike the typical medical expense deduction on Schedule A, these premiums are deductible from the first dollar, with no threshold to meet. One important thing to check before you take this is, if you are covered under a spouse’s health insurance through an employer, then you can’t use this. It’s only if you get your insurance through your business.
Members of the National Guard or military reserve who travel more than 100 miles and overnight to attend drills or meetings get to deduct the travel. One again no itemizing required. (Yipee!) That said, I’m sure one reason this deduction gets overlooked is that it’s a little tricky to calculate. You get to deduct your travel costs subject to federal maximums. Follow the instructions carefully or better yet, call your accountant. :-)