April 15 is almost here and time is running out to file your 2013 taxes on time. With that in mind, The Advice Show asked Oak Brook CPA Anthony J. Pagliuco, Jr. about the most overlooked deductions and misunderstood tax credits.
Below are 10 points taken from of our talk, but the entire conversation can be downloaded via SoundCloud or streamed via YouTube. “The Advice Show” is part of the Sun-Times Media Local Podcast Network.
Common Tax Credits
1. Residential Energy Credit. This can be used for energy efficient improvements such as exterior doors and windows, electric or geothermal heat pumps.
2. Retirement Savings Credit. You can get a tax credit for investing in yourself by putting money in your 401(K) or an IRA.
3. Dependent Care Credit. For working families, childcare costs can be partially reimbursed through this credit.
4. Education Credits. For college students, fees for tuition, books and other expenses may be eligible for a tax credit.
5. Earned Income Credit. For lower income families with children, this benefit can result in thousands of dollars in a return.
Common tax errors and misconceptions:
6. False: “I can deduct any clothing that I wear to work.”
Pagliuco says that unless you wear a uniform, the IRS will not underwrite your fashion sense.
7. False: “I can deduct business mileage for going to and from work."
Pagliuco says that’s called “commuting” and it’s not tax deductible. The same goes for parking.
8. False: “I can deduct the value of my time spent doing volunteer work.”
Pagliuco says that won’t fly with the IRS. You can, however, deduct out-of-pocket costs (such as a babysitter, mileage, doughnuts) while you donate your time to charity.
Tax benefits that you may not be taking advantage of:
9. For business owners, payments to charity can be promotional expenses instead of a donation deduction, resulting a much greater tax benefit. For example: Sponsoring a hole at a charity golf outing rather than donating cash.
10. Miscellaneous Itemized Deductions (the total must exceed 2 percent of Adjusted Gross Income) for:
- Investment fees paid in brokerage accounts
- Union Dues
- Using your own car for company trips (not including commuting) is deductible at 56.5 cents per mile for 2013.
- Using your cell phone for work (a portion is deductible)
- Using your computer for work (a portion is deductible)
This excerpt has been edited for length and context. For more about Anthony J. Pagliuco, visit his website: www.poacpa.com.