Pop quiz: If you count by the line on your federal income tax return, you’ll add up a baker’s dozen of these items. The actual total is even higher — and each item can save you money. What are they? Answer: Called “above-the-line deductions,” these items are adjustments you can subtract from your total income, whether you itemize or not.
For 2006, some of these deductions have changed. Here’s a selected overview.
- Educator expenses. Because of last-minute legislation in 2006, you won’t see this deduction on your tax form. But if you’re an eligible teacher, you can reduce your income by up to $250 of unreimbursed classroom expenses. Books, supplies, and computer equipment you purchase with your own money are examples of qualifying expenses.
- Tuition and fees deduction. The adjustment for tuition or related expenses you paid for yourself, your spouse, or a dependent is also missing from your tax form, but still available. For 2006, the maximum deduction is $4,000.
- Archer Medical Savings Accounts (MSA). Though MSA contributions made by you or your employer have been deductible in the past, you’ll find a separate line for this item on your 2006 return. The amount you can claim is limited by your income and a percentage of your health insurance plan’s annual deductible.
- Moving expenses. If you moved in order to start work in a new location, this deduction can benefit you. The standard mileage rate for moving increased to 18 cents for 2006.
Other changes include increased income phase-outs for the IRA contribution deduction and higher deduction limits for health savings accounts. We can help you make the most of these adjustments. Please give us a call. Questions for our Financial Expert?
E-Mail us at: finance@ClevelandSeniors.Com
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