Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

Tax return could contain treasure trove

- by Alan Duvall 

Published in Dayton Daily News February 19, 2006  

A careful examination of individual tax returns will often disclose a wealth of missed opportunities.  Let’s open the treasure chest to find some tax doubloons. 

Workers with more than one employer for the year may find they can celebrate a refund of overpaid FICA taxes.   

State and local tax refunds are taxed, but only if payment yielded a tax benefit in the prior year.  If no itemized deductions were reported or if the alternative minimum tax effectively canceled deductions, reportable refund income may be reduced. 

A new itemized sales tax deduction is available when it exceeds income tax deductions, of particular use to residents of non-income tax states (Florida) or individuals in low tax brackets. 

Imagination with regard to weight loss, addiction and stop-smoking programs as well as lodging costs can maximize medical deductions.  Major portions of nursing home expenses can also generate huge tax benefits.   

Auto mileage can be deducted for un-reimbursed miles driven for business (44.5 cents per mile), charitable (14 cents) and medical purposes (18 cents). 

Individuals have until April 15 to make pension contributions to deductible or ROTH IRA’s and even non-deductible IRA’s (available if earnings exceed designated limits).  Taxpayers over the age of 50 can elect to make elective “catch-up” pension contributions in excess of normal limits, the exact amounts dependant upon the applicable pension or IRA.

Taxpayers who have recently purchased or refinanced homes should examine closing statements for imbedded real estate tax, interest and points deductions. 

Married taxpayers may find election to file separately can reduce marital taxes.  Ohio savings often determine the benefits of this option. 

Digging into Page 2 of the Ohio return can unearth many tax nuggets.  Federally taxed income sources such as federal interest, tax refunds as well as disability, survivor and Social Security benefits may not be taxed at the Ohio level.  Special deductions and credits may also be gained from education, health insurance, dependant care and adoption, political contributions and elderly expenses.  

City refunds may even be available for employees working in taxing cities, living in non-tax districts, for wages allocated to time traveling outside city limits.   

Good luck on your tax treasure hunt.

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.