Tax tips
Editor'* Note: The Penn
sylvania Institute of Cer
tified Public Accountant*
offer* the -following SO
helpful tax tip* a* a public
service to reader*.
1. POLITICAL
DEDUCTIONS DOUBLED
The deduction for political
contribution* haa - been
doubled since last year. You
can deduct the first hundred
dollars contributed in 1975.
The tax credit favored by
higher income taxpayers
also has been doubled. It's
good now for $25.
2. TUITION A
MEDICAL DEDUCTION?
When adding up your
medical deductions, one
unlikely place to look is in
your child’s school tuition
bills. Many schools itemize
on their bills the amount
assignable to medical costs.
If there isn't such a break
down on your bills, ask for it.
3. TAX EXEMPT
SICK PAY
If your paychecks kept
coming when you were out
sick, part of the sick pay you
received may be tax exempt.
But responsibility for
computing what amount is
exempt has been shifted
from your employer to you,
so if you’re affected you may
need professional
assistance.
4. TAKING PEOPLE
OFF WELFARE
Are you one of the rare
employers who took on full
time help in 1975? If the
person you hired was on
welfare for at least ninety
days prior to being hired,
you may have a tax credit
coming, worth 20 percent of
the wages you paid, up to
$l,OOO.
5. RECOVERIES FROM
PREVIOUS YEARS
If you took a tax deduction
in some previous year for a
loss or an expense, and then
received belated insurance
compensation in 1975, does
that mean you have to go
bach and correct the earlier
tax return? Not at all. Just
list the insurance payment
as income on your 1075
return.
8. TAXES ON
INSURANCE BENEFITS
Are insurance benefits
taxable? Life insurance
benefits, no. Payments for
property losses, only if they
exceed actual losses. And
insurance reimbursement
for medical expenses is
taxable only if you
previously took the expense
as a tax deduction.
7. DEDUCTING
CHARITABLE EXPENSES
If you are one of those nice
people who work for
charities, when computing
your deductions for
charitable contributions,
don’t forget the out-of-pocket
expenses incurred in
working for such groups.
These can include driving
costs, at seven cents a mile,
but don’t deduct the value of
your own time or the cost of a
babysitter.
8. TAXES ON
UNEMPLOYMENT
BENEFITS?
If you are one of those
people who were out of work
last year, are unemployment
benefits taxable income? If
they’re supplemental
benefits paid by a former
employer, or severance pay
or guaranteed wages under a
union-contract, yes. But if
they’re state unemployment
benefits, no tax.
9. MEDICAL HOME
IMPROVEMENTS
Modifying a house for
medical reaaona can bring a
tax deduction, but make sure
your doctor certifies the
Improvement as necessary,
and have a real estate ap
praiser certify any increase
In value. If there is on in
crease In value, It must be
excluded from the deduction.
10. TAX CREDIT ON
BUSINESS EQUIPMENT
If you bought a car or other
equipment to be used in your
business, you may be in line
S vestment tax credit
ten percent of the
price. If the car is
used ohly partly for
business, the credit must be
pro-rated accordingly.
11. NON-CASH
CHARITABLE
CONTRIBUTIONS
Here’s a suggestion about
federal tax rules for those
making a charitable con
tribution of a non-cash item
worth more than $2OO. You
now have to submit with
your tax return a copy of an
appraiser’s evaluation, and
supply certain other in
formation, such as whether
the donation has any strings
attached.
12. INCOME FROM
MORTGAGE
SETTLEMENTS
Some banks wipe out old,
low-interest home mor
tgages by offering discounts
to those who pay them off
early. If you had part of a
mortgage forgiven in this
manner, remember that
Internal Revenue considers
the amount forgiven to be
taxable income, to be
declared on your tax return.
13. DEDUCTING
CASUALTY LOSSES
Thousands of taxpayers
are eligible for deductions
for storm damage or losses
caused by theft, fire and
other casualties. Remem
ber, the first hundred dollars
of loss per casualty is not
deductible, and neither are
losses covered by insurance.
14. LOSS ON HOME SALE
NOT DEDUCTIBLE
Did you make a profit
when you sold your home?
You must pay capital gain
tax on the profit unless you
re-invest in another home
costing at least as much. But
what if youlost money can
the loss be taken as a
deduction? Uncle Sam says
no, not unless the house was
a business investment.
15. DEDUCT CAPITAL
LOSSES AT
$lOOO A YEAR
Your net capital losses
those in excess of capital
gains may be tax
deductible, but only up to
$lOOO in any one year. If you
have capital losses over that,
you can deduct them on
future tax returns, at the
same rate of up to a thousand
dollars a year.
16. HOME SELLING COSTS
NOT DEDUCTIBLE
The costs of selling your
home lawyer’s fees,
broker’s commissions, and
so on are not deductible.
However, those selling costs
can save you taxes in
another way by reducing
any capital gain that may
result, if you made a pprfit
on the sale. x
17. DEDUCTING
THEFT LOSSES
Here’s timely federal tax
advice for those unlucky
enough to have -lost
valuables to thieves during
the past year: Uninsured
theft losses over $lOO can be
tax deductible, but you may
have to prove the items were
really stolen, not just lost or
misplaced. One way to do
this is with a copy of the
police theft report.
18. SOME TAXES
NOT DEDUCTIBLE
Many of the taxes you pay
can be taken as federal in
come tax deductions, but
there are some that cannot,
including most taxes paid to
the federal government,
motor vehicle license fees,
assessments for local im
provements, and social
security taxes. No deduc
tions for any of those.
19. DEDUCTING
JOB-HUNTING COSTS
Here’s a suggestion that
may save federal tax dollars
if you spent money trying to
find a job. Job seeking costs
used to be tax deductible
only if you actually found a
new position. Now they may
be deducted even if they fail
to pay off. However, the
search must be for work in
the same field you had been
in previously.
20. NO TAX ON SMALL
UNSOLICITED GIFTS
When declaring your
taxable income, you don’t
have to include the value of
small gifts that companies
Lancaster Farming Saturday. Pec 27.1975
give out to win goodwill
not if you didn’t ask for the
gift, or do anything to get it,
and if returning it to the
sender would be a lot of
trouble.
21. RENTING TO A
RELATIVE
If you rent part of your
home to a relative, why not
treat that portion of the
building as a business in
vestment, taking expenses
as tax deductions? If you do,
the rent you charge must tye
at the going rate or the IRS
may find yours is not a true
business operation.
22. EMPLOYEE
BENEFITS TAXABLE?
The question of whether
job benefits such as meals or
lodging on your employer’s
premises are taxable, hinges
on the employer’s reason for
providing them. If it’s for hla
convenience, no tax. If it’s to
induce you to work for him,
the benefits are considered
taxable income.
23. CAR COSTS EXCEED
15 CENTS PER MILE
Car costs have risen so
sharply that you may want to
itemize your business
driving expenses, instead of
taking the flat fifteen-cent-a
mile deduction. For newer
cars, true costs are said to be
higher than fifteen cents
even for the subcompacts,
and more like 30 cents for big
cars.
24. OFFICE-IN-THE-HOME
DEDUCTION
Unless you can meet the
strict requirements, chances
are slim that IRS will accept
a deduction for an office in
your home. To qualify, the
work done at home must
necessarily be done there;
there must be a valid reason,
such as the unavailability of
your employer’s premises.
25. NEW-HOME
BUYERS CREDIT
If you bought a new home
during 1975, here’s timely
advice that may save federal
tax dollars: Check on the
rules to learn whether you
qualify for that tax credit of
up to $2,000. The rules were
modified in mid-year,
making many more
homebuyers eligible than
was die case under the
original requirements.
26. NO DEDUCTION
FOR INSULATING
Despite all the talk you
may have heard, there is no
tax deduction for having
insulated your home or for
otherwise cutting down on
fuel consumption. Such a
deduction may yet be voted
by Congress, but so far
there’s nothing that applies
to the 1975 income taxes.
27. WHICH
CHARITIES QUALIFY?
Not all charitable con-
tributions arc deductible.
You can't deduct money
given to friends, relatives or
strangers, no matter how
hard up they may be. To be
deductible, the charity must
be on the list that's available
for inspection at any Internal
Revenue office.
28. GAMBLING LOSSES
NOT DEDUCTIBLE
Do you take chances? You
can’t deduct gambling losses
on your income tax return. If
provable, losses can be
subtracted from gambling
winnings, thus reducing the
tax on the winnings. But if
what you lost exceeds what
you won, there’s no
deduction for the amount
you're short.
29. UNPAID FRIENDLY
LOAN A BAD DEBT?
If you lend money to a
friend and he fails to repay,
you can take that as a bad
debt deduction only if you
can show that a real debt
existed, with formal
agreement as to interest and
repayment terms. Also, you
must have made a serious
effort to collect, and failed.
30. COMPUTE CASUALTY
LOSSES TWO WAYS
There are two ways of
computing deductible losses
from storms, fires and other
“casualties”. One is the
difference between value
after the event and value just
before. The other is the cost
of restoring the property to
pre-casualty condition.
Figure it both ways to see
which is better.
They say George
Washington could never tell
a Ue. You won’t be fooling
either if you tell your family
they need 2 to 3 servings of
vegetables each day for good
nutrition. This Snappy Green
Bean should raise the
popularity rating of
vegetables around your
house. Dice 4 slices of
salami, pan-cook one
minute. Add a chopped small
onion and a tablespoon
butter. Saute until golden.
Add V* cup nonsweet French
dressing and 2% cups
drained cooked or canned
string beans. Heat. Garnish
with parsley.
Be everyone’s favorite
valentine by serving cheese
chive stuffed franks. Split
skinless franks and fill with a
mixture of 3 ounces cream
cheese blended with a
tablespoon minced chives.
Wrap in a strip of bacon and
broil 8 minutes, turning for
even browning.
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