Tax breaks for everyone (even top earners)
Some perks are available to just about anybody — regardless of income
-
- Share
If you’re a high-income type, you’re probably painfully aware that some tax
breaks are phased out (either reduced or eliminated) as your adjusted gross
income, or AGI, increases. That’s the price of success, right? Well, not
necessarily. Believe it or not, some tax breaks are available to just about
anybody — regardless of income. Here are six of them.
If you’re self-employed, you may be able to contribute and deduct up to $50,000 for 2012 and up to $51,000 for 2013 by setting up a simplified employee pension, or SEP. Contributing to a SEP could dramatically reduce your taxable income and save you a bundle. Think you’ve already missed the boat for your 2012 taxes? Think again. If you don’t already have a retirement plan in place, you can still set up a SEP and make a deductible contribution to your account for 2012. And that could be done as late as Oct. 15 of this year if you extend your 2011 return for the automatic six-month period.
Credit for Overpaid Social Security Taxes Did you have two jobs last year and earn more than $110,100? Then you probably had too much withheld for Social Security tax. Your credit will be for the amount you contributed beyond $4,624, which represents the 4.2% Social Security tax based on a maximum salary of $110,100. Getting the money back is easy — just report the overpaid amount (you can tell what that is by summing up the Social Security tax withholding shown on your W-2s) on Form 1040, line 69.
If you’re self-employed, you may be able to contribute and deduct up to $50,000 for 2012 and up to $51,000 for 2013 by setting up a simplified employee pension, or SEP. Contributing to a SEP could dramatically reduce your taxable income and save you a bundle. Think you’ve already missed the boat for your 2012 taxes? Think again. If you don’t already have a retirement plan in place, you can still set up a SEP and make a deductible contribution to your account for 2012. And that could be done as late as Oct. 15 of this year if you extend your 2011 return for the automatic six-month period.
Credit for Overpaid Social Security Taxes Did you have two jobs last year and earn more than $110,100? Then you probably had too much withheld for Social Security tax. Your credit will be for the amount you contributed beyond $4,624, which represents the 4.2% Social Security tax based on a maximum salary of $110,100. Getting the money back is easy — just report the overpaid amount (you can tell what that is by summing up the Social Security tax withholding shown on your W-2s) on Form 1040, line 69.
Deducting Alimony Payments to Your Ex
Read our story Assuming you qualify, you can claim a full write-off of your
alimony payments on line 31a on page one of Form 1040.
Writing Off Your Gambling Losses So Lady Luck up and left you during your last trip to Vegas, huh? Believe it or not, Uncle Sam feels your pain, and will allow you to deduct your losses up to the amount you’ve won during the year on Schedule A, line 28, assuming you itemize deductions. (Your gross winnings are taxed as regular income and should be reported on line 21 of Form 1040.) But beware: If you claim this deduction, you should have written evidence of your losses, just in case you get audited. So try to dig up some evidence (slot club statements, etc.). In the future, keeping a journal of your daily net wins and losses should do the trick. After all, asking that blackjack dealer for a receipt might be tricky.
Writing Off Your Investment Interest
Writing Off Your Gambling Losses So Lady Luck up and left you during your last trip to Vegas, huh? Believe it or not, Uncle Sam feels your pain, and will allow you to deduct your losses up to the amount you’ve won during the year on Schedule A, line 28, assuming you itemize deductions. (Your gross winnings are taxed as regular income and should be reported on line 21 of Form 1040.) But beware: If you claim this deduction, you should have written evidence of your losses, just in case you get audited. So try to dig up some evidence (slot club statements, etc.). In the future, keeping a journal of your daily net wins and losses should do the trick. After all, asking that blackjack dealer for a receipt might be tricky.
Writing Off Your Investment Interest
No comments:
Post a Comment