10 Things I Know About ... Taxes and deductions
Paul Dion, CPA
10. The growing tax code
In 2012, the Internal Revenue Code contained 9,000 pages. The original 1913 document required 27.
9. We're here for you – maybe.
From 2004 to 2012, calls received by the IRS from taxpayers increased from 71 million to 108 million. However, calls answered declined from 36 million to 31 million.
8. What?!?
McDonald's has received tax breaks to sell Chicken McNuggets overseas.
7. Not for profit? Really?
Lady Gaga's foundation claims to connect youth with anti-bullying, mental health and other resources. But she reportedly paid millions to consultants in 2012. (She denied that claim.)
6. A non-taxing job
Job search expenses are fully deductible beyond the first 2 percent of your adjusted gross income, as long as you itemize. The deduction is available whether you're employed or not.
5. Day-care deductions beyond preschool
Most parents realize there's a tax credit for day care when children are young. But it can be used for before- and after-school care, as well as day camps during school vacations.
4. Got a 'deadbeat friend'?
Loaned money to a friend who never paid you back? You may qualify for a non-business bad debt deduction of up to $3,000 a year.
3. Get paid for trips to the doctor.
Medical miles (23.5 cents per mile) to and from appointments, plus travel (airline fares and hotel rooms) for out-of-town treatment can be deducted if you itemize deductions.
2. Student loan interest
If a parent pays back their child's student loans, the IRS treat that money as if the child paid. As long as the child is not claimed as a dependent, he or she can deduct up to $2,500 in student loan interest paid by the parent.
1. State sales and income taxes
Thanks to legislation passed in December, taxpayers filing their 2014 returns can still deduct either state income tax paid or sales tax paid, whichever is greater, if they itemize.
Paul Dion, CPA, owns and operates an accounting firm in Millbury. Contact him at info@pauldioncpa.com.
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