What are Miscellaneous Tax Breaks for 2013

Home Tax Advice


You can deduct the cost of your accountants or attorney’s fees for tax advice and the cost of tax return preparation related to preparing Schedule C, Profit or Loss from Business, or Schedule F, Profit or Loss from Farming. You can even deduct the cost of books.

Note that the total cost of tax advice or tax return preparation can be deducted only to the extent they exceed 2% of the adjusted gross income shown on your tax return. If your miscellaneous
itemized deductions, not including tax advice, exceed at least 2% of your adjusted gross income, the cost of your tax advice or tax return preparation fees are fully deductible. If your
miscellaneous itemized deductions do not exceed 2% of your adjusted gross income, then the cost of tax advice is deductible only to the extent that cost, when added to the other miscellaneous
itemized deductions, exceeds 2% of your adjusted gross income.

Example: Mike has adjusted gross income of $100,000. 2% of his AGI is $2,000. Let’s assume that Mike has miscellaneous itemized deductions of $2,500, other than his fee for tax advice. If Mike pays $700 to his attorney for tax advice relating to the sale of his home, he can deduct the entire $700 amount because his miscellaneous itemized deductions exceed 2% of his AGI.

Now lets change things in the example. Say Mike’s miscellaneous itemized deductions are $1,700 instead of $2,500. If this were the case, Mike would be able to deduct only $400 of the cost of his tax advice. This is because $300 of his $700 tax advice cost is needed to be added to his miscellaneous itemized deduction amount of $1,700 to reach the $2,000 floor. The amount of tax advice cost remaining is $400 ($700 – $300).

Note that this tax deduction is only available if you itemize your deductions.

Changes to Your W-4


You may want to adjust your withholding allowances on your wages in order to have less withholding to even out your tax burden. Since you receive tax breaks in the form of home mortgage interest and real estate tax deductions when you own a home, you should probably adjust your withholding allowance. There is simply no reason to have a large refund at the end of the year. When you get a large refund you have essentially let the government hold your money interest free.

Before you make changes to your W-4, you should determine if it’s feasible for you to do so. There are several online calculators you can use. We’ve included a free W-4 calculator to determine your witholding allowance.

Click here to determine the feasibility of adjusting your withholding allowances

Note, you should use the link above to determine if you should adjust your withholding allowances. If you select the wrong withholding allowance, you may underpay your tax burden throughout the year resulting in a tax bill to the IRS at the end of the year.

Moving Expenses


You may be able to deduct moving expenses whether you are self-employed or an employee. Your expenses must be related to starting work at your new job location.

Learn about moving expenses here

Are Vehicle Registration Fees Tax Deductible


The answer is yes! The yearly cost of your vehicle registration may be tax deductible. If your car is used only for personal purposes, you can deduct automobile registration fees based on the value of the car as a state personal property tax if certain conditions are met.

Requirements:

      1. The fee is an ad valorem tax. Ad valorem tax is a fee based on a percentage of the car’s value.
      2. The fee is imposed on an annual basis.
      3. The fee is imposed on personal property.

The following is a listing of states with Ad Valorem taxes:

  • Alabama
  • Arizona
  • California
  • Colorado
  • Connecticut
  • Georgia
  • Indiana
  • Iowa
  • Kentucky
  • Maine
  • Massachusetts
  • Minnesota
  • Mississippi
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • Oklahoma
  • Washington
  • Wyoming

Roth IRA Withdrawal


You are allowed to withdrawal up to $10,000 from your Roth IRA without penalty for “first-time” home-buyer expenses. To qualify you must meet the following requirements:

      1. The distribution must be made after the end of a five-year period beginning with the first day of the first taxable year for which any Roth IRA contribution was made.
      2. You use the distribution to pay up to $10,000 of qualifying first-time home-buyer expenses.

The $10,000 amount is a lifetime cap per IRA owner, not an annual limitation. Expenses qualify if they are used within 120 days of the distribution to pay the acquisition costs of a primary residence for you.

The residence does not have to be the homeowner’s “first” home. A qualifying first-time home-buyer is considered to be someone who did not have a present ownership interest in a principal residence in the two-year period ending on the acquisition date of the new home. If the home-buyer is married, both spouses must satisfy the two-year test.

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