St. Petersburg Times Online: Business
TampaBay.com
Place an Ad Calendars Classified Forums Sports Weather
tampabay.com

printer version

Ten tips

By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times
published March 10, 2002


Don't chance it: Make sure deductions are legal

If you're like most people who itemize deductions, you've got a box or a file folder chock full of possibilities. But not every official-looking receipt is a legal deduction. In fact, claiming some deductions is almost like asking for an IRS audit. Here are a few areas where it pays to be extra careful:

* * *

1. These losses don't count. If you lost money on the sale of your home, don't expect any sympathy from the IRS. You may consider your home an investment, but your loss is not deductible. The same goes for losses on the sale of personal property such as your car.

2. It pays to stay healthy. While doctor bills and other medical expenses are technically deductible, you can't deduct them until they exceed 7.5 percent of your adjusted gross income. And some expenses aren't deductible at all. Don't try to claim a medical deduction for health club dues, bottled water, over-the-counter supplements, funeral expenses or diet foods.

3. Pay attention to premiums. Medical insurance premiums are deductible, but not if they were paid with pretax dollars. Premiums for qualified long-term care insurance are deductible, but only within age-based limits. Life insurance and mortgage insurance premiums are not deductible.

4. Classify that interest. Interest on your home mortgage, student loans or brokerage margin account may be deductible, but don't get carried away and try to deduct the interest you paid on credit cards, car loans or other personal loans.

5. Taxes are just taxing. Forget about taking a deduction for sales taxes, documentary stamp taxes or the vehicle registration fee you paid for your car. Sadly, Social Security taxes are not deductible either, but real estate taxes are.

6. Moving may not pay. Moving costs are deductible only if your job location changed. You must meet time and distance tests, and there are limits on what can be deducted. New blinds don't qualify.

7. Mix business and pleasure with care. If you use your car, computer or other property partly for work and partly for pleasure, keep records and deduct only the work-related expenses.

8. Divvy up those dependents. When parents file separately, usually the custodial parent gets to claim the child as a dependent, but the right can be assigned to the other parent.

9. Uncle Sam won't pick up the tab. If you bought a ticket to a charity lunch or dinner, subtract the value of the meal before deducting your contribution. Bingo cards and raffle tickets aren't deductible either.

10. Don't fall for fraud. Con artists promote a variety of schemes to "guarantee" a refund, from the creation of bogus businesses to claiming reparations for slavery. Even if the requested refund comes through, filing a false return may lead to penalties and interest later on.

-Sources: IRS, CCH Inc., Ernst & Young Tax Guide

Back to Business
Back to Top

© 2006 • All Rights Reserved • Tampa Bay Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111
 
Special Links
Stocks


From the Times
Business report
  • Returns, Refunds and Relief
  • Loose change
  • Ten tips

  • From the AP
    Business wire


    From the state business wire

  • Judge denies dismissal of Citigroup shareholder suits
  • Carnival to buy 4 cruise ships from Italian builder

  •