Quick money tips for February 2017

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2016 Medical Expense Deduction 

2016 is the last tax-filing year that taxpayers over age 65 can deduct medical expenses that exceed 7.5 percent of their adjusted gross income (AGI) on their tax return. Starting in 2017, all taxpayers are subject to the 10 percent threshold.1

Married couples may file separately if one spouse had substantial medical bills in 2016. If filing jointly, those bills may not exceed the threshold against the couples’ combined income. If filing separately, one spouse may be able to claim a higher deduction against his or her personal income alone.

Note that in a non-community property state, the separate filer may deduct only expenses paid from a personal account, not a joint checking account. Whichever spouse paid the medical bills from a personal checking account can claim the deduction on a separate tax return.2

 

Deductible Expenses for Charities

The following are tips on what and how to deduct expenses related to charitable contributions: 3

  • Contributions must be made in cash or property by year-end to be deductible
  • Qualified expenses are deductible only if you itemize deductions on your tax return
  • The deductible value of a property donation is usually its fair market value
  • Deductible donations are limited to no more than 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases
  • For certain private foundations, veterans organizations, fraternal societies and cemetery organizations, deductible donations are limited to no more than 30 percent of adjusted gross income (AGI)
  • You may not deduct your time or the value of your services contributed to a charity 4
  • You may deduct out-of-pocket expenses related to charitable activities 5 

 

April Tax Filing Date Extended

This year’s tax filing deadline has been pushed back a day to April 18 because of Washington D.C.’s Emancipation Day holiday on April 17.

The tax filing season officially opened Jan. 23 for the approximately 153 million returns expected. The IRS reports that more than four out of five returns are prepared by tax return preparation software programs and filed electronically these days.6 

 

Savings Ideas for All Ages

There’s no better demographic to tap for money-saving ideas than millennials. They call them “life hacks,” which are basically cost-effective ways to accomplish everyday tasks. Consider the following tips:7

  • Open a savings account at a separate bank and have a portion of your income automatically deposited there each pay period. Do not link the account to your regular bank accounts and do not get a debit card, so that the only way to access your funds is to physically visit the location during banking hours. This will help deter you from tapping those funds frivolously.
  • Buy food in bulk and prepare meals in bulk. In other words, plan to cook or bake within a day or two of shopping at one of the warehouse clubs. This will allow you to prepare casseroles, etc. before the food goes bad and freeze it for later use.
  • The night before payday, transfer the “free and clear” balance from your checking account into your savings account. This will help encourage you to live within your means and move unused funds out of circulation. Make it a goal to transfer a little more than the previous balance each time.
  • If you have a spare automobile or live in a city with an excellent transportation system, consider selling your car. This can help you save on a daily, weekly, monthly and even annual basis by eliminating car payments, gas, maintenance, repairs, parking, insurance and property taxes.
  • One disciplined millennial accumulated $9,000 over five years by stockpiling his $1 bills. Every time he came home with ones in his wallet, he took them out and put them in a safe.

 

Some Content prepared by Kara Stefan Communications. 

1 1040.com. 2016. “Deducting Medical Expenses.” https://www.1040.com/tax-guide/health-and-life-insurance/deducting-medical-expenses/. Accessed Dec. 15, 2016.
2 IRS. Feb. 22, 2016. “Publication 502 (2016), Medical and Dental Expenses.” https://www.irs.gov/publications/p502/ar02.html#en_US_2016_publink1000178855. Accessed Dec. 1, 2016.
3 IRS. Oct. 28, 2016. “Charitable Contribution Deductions.” https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions. Accessed Dec. 19, 2016.
4 IRS. Jan. 15, 2016. “Charitable Contributions.” https://www.irs.gov/pub/irs-pdf/p526.pdf. Accessed Jan. 11, 2017.
5 Ibid.
6 IRS. Dec. 9, 2016. “2017 Tax Filing Season Begins Jan. 23 for Nation’s Taxpayers, Tax Returns Due April 18.” https://www.irs.gov/uac/2017-tax-filing-season-begins-jan-23-for-nations-taxpayers-with-tax-returns-due-april-18. Accessed Jan. 6, 2017.
7 Marianne Hayes. Business Insider. Nov. 30, 2016. “7 real people share the life hacks that save them thousands.” http://www.businessinsider.com/real-people-share-the-life-hacks-that-save-them-thousands-2016-11/#-6. Accessed Dec. 10, 2016.

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