If you’re a high-income type, you’re probably painfully aware that some tax breaks are phased out
\n(either reduced or eliminated) as your adjusted gross income, or AGI,
\nincreases. That’s the price of success, right? Well, not necessarily. Believe
\nit or not, some tax breaks are available to just about anybody — regardless of
\nincome. Here are six of them.<\/p>\n
If you’re self-employed, you may be able to contribute and deduct up to $49,000
\nfor 2011 and up to $50,000 for 2012 by setting up a simplified employee
\npension, or SEP. Contributing to a SEP could dramatically reduce your taxable
\nincome and save you a bundle. Think you’ve already missed the boat for your
\n2011 taxes? Think again. If you don’t already have a retirement plan in place,
\nyou can still set up a SEP and make a deductible contribution to your account
\nfor 2011. And that could be done as late as Oct. 15 of this year if you extend
\nyour 2011 return for the automatic six-month period.<\/p>\n
Credit for Overpaid Social Security Taxes<\/strong> Deducting Alimony Payments to Your Ex<\/strong> Writing Off Your Gambling Losses<\/strong> Writing Off Your Investment Interest<\/strong> The Dependent Care Credit<\/strong> If you worked last year and paid someone to take care of your under-age-13 If your income (married or single) exceeds $43,000 then you can take a credit By <\/cite>Bill Bischoff<\/em> | <\/cite>SmartMoney<\/em> <\/cite><\/p>\n","protected":false},"excerpt":{"rendered":" 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 […]<\/p>\n","protected":false},"author":88890,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-82","post","type-post","status-publish","format-standard","hentry","category-tax-tips"],"yoast_head":"\n
\nDid you have two jobs last year and earn more than $106,800? Then you probably
\nhad too much withheld for Social Security tax. Your credit will be for the
\namount you contributed beyond $4,486, which represents the 4.2% Social Security
\ntax based on a maximum salary of $106,800. Getting the money back is easy —
\njust report the overpaid amount (you can tell what that is by looking at your
\nW-2s) on Form 1040, line 69.
\n<\/strong><\/p>\n
\nAssuming you qualify, you can claim a full write-off of your alimony payments
\non line 31a on page one of Form 1040.<\/p>\n
\nSo Lady Luck up and left you during your last trip to Vegas, huh? Believe it or
\nnot, Uncle Sam feels your pain, and will allow you to deduct your losses up to
\nthe amount you’ve won during the year on Schedule A, line 28, assuming you
\nitemize deductions. (Your gross winnings are taxed as regular income and should
\nbe reported on line 21 of Form 1040.) But beware: If you claim this deduction,
\nyou should have written evidence of your losses, just in case you get audited.
\nSo try to dig up some evidence (slot club statements, etc.). In the future,
\nkeeping a journal of your daily net wins and losses should do the trick. After
\nall, asking that blackjack dealer for a receipt might be tricky.<\/p>\n
\nDid you borrow on margin last year? As long as you itemize deductions on your
\nreturn, you probably can deduct the interest you paid on the account on line 14
\nof Schedule A (assuming you itemize deductions). The deduction for the interest
\npaid to carry taxable investments (so-called investment interest expense) is
\nunaffected by any phase-out rules. There’s only one small catch: Your
\ninvestment interest expense deduction generally can’t exceed your taxable
\nincome from interest, annuities, royalties and short-term capital gains. That
\nsaid, any excess investment interest expense can be carried over to the
\nfollowing tax year. See IRS Form 4952 (Investment Interest Expense Deduction)
\nfor all the details (including a special election to treat long-term capital
\ngains and dividends as investment income).<\/p>\n
\nOK — so this last tax break is technically subject to some AGI phase-out
\nrules. But truthfully, nearly everybody who claims this credit is partially
\n“phased out.” What’s left is still a great tax break.<\/p>\n
\nchild, you could be eligible for this credit. Keep in mind, if you’re married,
\nboth spouses must work, unless one is a student. Additionally, neither of you
\ncould have contributed to a child-care flexible spending account (through your
\nemployer) to cover the same expenses last year.<\/p>\n
\nequal to 20% of your child-care expenses. However, the credit limit is $600, if
\nyou have one child, or $1,200, if you have two or more. (If you earned less
\nthan $43,000 you may be entitled to a larger credit.) Thankfully, the
\ndefinition of child care is generous — it can cover anything from summer day
\ncamp to a baby sitter. See Form 2441 for details. Claim your credit on line 48
\nof Form 1040.<\/p>\n