|
|
Checklist of Itemized Deductions for 2005
Claiming itemized deductions will save you
taxes if your total itemized deductions exceed the standard deduction. The
standard deduction for taxpayers who do not itemize deductions on Schedule
A of Form 1040 is, in most cases, higher for 2005 than it was for 2004.
The amount depends on your filing status, whether you are 65 or older or
blind, and whether an exemption can be claimed for you by another
taxpayer.
The basic
standard deduction amounts for 2005 are:
-
Head of household - $7,300
-
Married taxpayers filing
jointly and qualifying widow(er)s - $10,000
-
Married taxpayers filing
separately - $5,000
-
Single - $5,000
The standard deduction amount
for an individual who may be claimed as a dependent by another taxpayer
may not exceed the greater of $800 or the sum of $250 and the individual's
earned income.
Standard Mileage Rates
For tax years beginning in 2005, the
allowable deductions for the standard mileage rate for the period January
1, 2005, through August 31, 2005, are as follows:
-
Business miles.
The standard mileage rate for the cost of operating your car increases to
40.5 cents a mile for all business miles driven.
-
Charitable services.
The standard mileage rate allowed for use of your car when you use your
car to provide charitable services to a charitable organization is 14
cents a mile.
-
Medical reasons.
The standard mileage rate allowed for use of your car for medical reasons
is 15 cents a mile.
-
Moving. The standard
mileage rate for determining moving expenses is 15 cents a mile.
The allowable deductions for
the standard mileage rate for the period September 1, 2005, through
December 31, 2005, are as follows:
-
Business miles.
The standard mileage rate for the cost of operating your car increases to
48.5 cents a mile for all business miles driven.
-
Charitable services.
The standard mileage rate allowed for use of your car when you use your
car to provide charitable services to a charitable organization is 14
cents a mile.
-
Medical reasons.
The standard mileage rate allowed for use of your car for medical reasons
is 22 cents a mile.
-
Moving. The standard
mileage rate for determining moving expenses is 22 cents a mile.
|
| Medical & dental
costs which include |
Other: |
Union dues
certain unreimbursed |
| Doctor & dentist
fees prescription medicines |
Real estate taxes
Personal property taxes |
Employee expenses
Subscriptions to Professional magazines Continuing professional education |
| Insulin |
Home mortgage
interest |
Occupational
licensing fees |
| Acupuncture |
Points paid on
purchase of Residence |
Travel expenses
relating to managing investments |
Air conditioner
necessary for allergies or respiratory ailments
|
Points paid on
refinancing |
IRA
administration fees College professor's research expenses |
| Nursing fees |
Investment
interest |
Job hunting cost |
| Hospital fees |
Charitable
contributions |
Medical exams
required by employer |
| Contacts,
including supplies used with contacts such as saline and enzyme cleaner |
Casualty losses |
Gambling losses
to Extent to gambling winnings |
Chiropractic
services
|
Theft losses |
Estate taxes |
| Nursing fees |
Tax return fees |
Depreciation on
equipment used for your job |
| Medical, dental,
and long-term care insurance |
Safe deposit box
used to store investments
|
Fees to collect
interest or dividends |
| Hearing Aids |
Work clothes not
suitable for normal wear |
Legal fees for
collecting taxable income or keeping a job |
| Dentures |
Expenses relating
to tax planning |
Trust
administration fees |
| Guide dog for
physically disabled persons |
Expenses relating
to investments |
Impairment-related work expenses |
| Cosmetic surgery
for deformity relating to a congenital abnormality, accident, or disease |
|
|
| Special equipment
installed in home to provide a medical benefit |
|
|
| Birth control
prescribed by a doctor |
|
|
|
Business Meals & Travel
If you incur expenses for
business related meals, travel or entertainment you may deduct them on your
tax return if you meet certain requirements. Generally, business travel is
fully deductible while business meals and entertainment are only 50%
deductible.
Business travel expenses are
those expenses incurred while away from home overnight on business. Travel
expenses include not only the costs of transportation but also the cost for
lodging, telephone, laundry and other similar expenses related to travel.
There are some restrictions. For example, travel for educational purposes or
costs of attending a convention, seminar or similar meeting or activity
related to a taxpayer's investment planning is not deductible.
Business meals and
entertainment expenses are only deductible if they satisfy the "directly
related" or "associated with" tests. Under these criteria you must have an
expectation of deriving some specific benefit from the activity. There must
be business actually discussed or engaged in before, during or following the
activity and the combined business and entertainment must be principally
characterized by business. You can only claim the expenses that your
employer has not reimbursed you for.
Deducting Business Auto
If you use your
personal vehicle for work you may be able to write off the costs on your tax
return. To qualify you must use your car in your job for the convenience of
your employer and maintain adequate records to substantiate your business
use. If you can meet these requirements then any unreimbursed expenses can
be deducted as a miscellaneous itemized deduction.
Substantiating or adequately documenting the business use is where most
taxpayers find themselves in trouble. If you claim a business expense
deduction for your vehicle without proper documentation you can probably
expect the IRS to disallow the deduction in audit. You shouldn't assume the
IRS will compromise and allow your deduction based solely on your testimony.
The best evidence is a detailed log with an entry for each trip; however,
diaries, trip sheets, expense reports or similar written evidence is
probably adequate. Ideally, the record should be prepared at or near the
time of the business use. The best way is to keep a logbook handy in your
automobile to record your miles as they occur.
If you plan on taking a business auto deduction this year, be prepared to
answer the following questions when you file your tax return:
1. Do you have evidence to support your deduction?
2. Is your evidence written?
3. What is the total business and personal mileage for the year?
4. What is the daily commuting distance between your home and work?
Taxpayers using an automobile in their trade or business can account for
business expenses using either the Standard Mileage Method or the Actual
Mileage Method. Normally you can use whichever method gives you the largest
deduction.
Under the actual cost method you deduct the actual expenses you incur in
maintaining your vehicle.
These expenses might include such things as:
Gasoline Oil
Batteries Parking fees
Washing & cleaning Taxes
Auto club memberships Repa1rs & auto maintenance
Insurance Licensing fees
You will be able to write off the percentage of your car's expenses that you
can attribute to business use.
|
|
