Fluent in Practice Management

The recent mailing of 2013 tax organizers brought to mind a few itemized deductions you may qualify for that can be easily overlooked.

Charitable deductions are not limited to only cash contributions. While the value of services provided to a charitable organization is not deductible, some deductions are permitted for out-of-pocket costs you incur while performing the services. This includes items such as away-from-home travel expenses, flat 14¢ per mile for use of your car while performing services for a charitable organization (you may also deduct parking fees and tolls), and the cost of a uniform you wear when you do volunteer work for the charity. No charitable deduction is allowed for a contribution of $250 or more unless you substantiate the contribution by a written acknowledgment from the charitable organization. You should maintain detailed records of your out-of-pocket expenses—receipts plus a written record of the time, place, amount, and charitable purpose of the expense.

Medical transportation is the cost of getting to and from medical treatment and is a medical expense. This includes taxi fares, public transportation, or the cost of using your own car. Car costs can be calculated at 24¢ a mile for miles driven in 2013, plus tolls and parking fees. Note that only the amount of total medical expenses that exceed 10% of your adjusted gross income (AGI) can be deducted. For many individuals this is a very high threshold to exceed. For example, with AGI of $250,000 only $1,000 of $26,000 in medical expenses is deductible; there is no tax benefit for the remaining $25,000 of expenses. If you are 62 or older there is a tax benefit on an Oregon return if your AGI is below $200,000. We are happy to help you determine if you qualify for either federal or state deduction prior to undergoing time intensive receipt tallying.

Home Refinance points can be deducted over the life of the new loan. If a refinance was done in 2013, simply send us a copy of the final HUD and jot on your tax organizer the new loan term years. If you are refinancing your mortgage for the second time, the portion of the points on the first refinanced mortgage that you haven’t yet deducted may be deductible at the time of the second refinancing. Also, prepayment penalty that you pay to terminate your old mortgage is deductible as interest in the year of payment.

State sales tax on big-ticket items is deducible in addition to the IRS published sales tax deduction.  If you purchased a big-ticket item – such as vehicles, boats, RVs – in 2013 make sure to note this on your tax organizer and provide a copy of the purchase document showing the taxes paid.

Be keeping an eye out for your organizer. If you have any questions, please contact our office, we are here to help!