Worthwhile to seek out tax deductions

This article was originally published on Monday, 18 February 2013 as the Money Matters article in the Guam Pacific Daily News (PDN).  Click here to subscribe to the PDN.

For the past few weeks we have been discussing how to prepare for your taxes. Once you have everything you need it’s time to sit down and get to the business at hand. Accounting for your earned income is pretty easy but filing for your deductions can be quite confusing. Ensuring that you get your entitled deductions may take some time but it will be well worth it. There are some deductions you may want to think about and some you may not know you may qualify for:

Itemizing your deductions. If you made an early or extra mortgage payment or made a pre-deadline payment on your property tax, you may want to consider itemizing your deductions. Although it’s easier to take the standard deduction, you may want to take the time to see if your expenses fall just below the allotted amount to make itemizing beneficial.

Keep track of your medical expenses.There are deductions that benefit those who have had medical issues in the past year. For the 2012 tax year, if your medical and dental expenses are greater than 7.5 percent of your adjusted gross income you may be eligible for a deduction.

If you were healthy last year and received a rebate from your medical health insurance you may want to determine if your rebate is taxable. The Internal Revenue Service (IRS) will want to collect a portion of the money that was not taxed.

Educators’ expenses. If you are a teacher, instructor, counselor, principal, or aide for children kindergarten through 12th grade and have worked for at least 900 hours during the school year and have paid for expenses out of pocket, you may be entitled to a deduction up to $250. If you and your spouse are both eligible educators and file jointly you may receive a maximum deduction of $500.

Compensation for jury duty paid to employer. You may receive a deduction if you were called to serve for jury duty and still received normal compensation from your employer. If your employer asked you to sign over a portion of your check that you received for jury duty as a partial compensation you may be entitled to deduct the amount of the payment you signed over.

These are just a few deductions you may want to research while working on you taxes. The IRS’s website has more information on eligibility for these and other deductions. If you are unsure if you qualify for the deductions you may want to contact a professional tax preparer for further guidance.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com. To read past columns visit the Money Matters blog at https://moneymattersguam.wordpress.com.

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