DON'T OVERLOOK VALUABLE TAX DEDUCTIONS

Don't overlook

valuable tax deductions

If you're looking

for deductions to help lower your 2000 tax bill, the Georgia Society of

CPAs provides the following information on commonly overlooked deductions

and what is and isn't deductible.

For starters,

many of the lesser-known deductions fall into the medical expenses and

miscellaneous itemized deductions categories and, as such, must exceed

a "floor" or minimum amount of your adjusted gross income (AGI)

before they become deductible.

In the case

of medical deductions, that floor is 7.5 percent of AGI; for miscellaneous

itemized deductions, it is 2 percent. Deductible expenses can add up faster

than you might think, so don't let these income thresholds prevent you

from claiming the deductions you deserve.

Health

insurance ­- Those who are self-employed can deduct 60 percent

of their health insurance payments from gross income. If you are not self-employed,

you deduct health insurance premiums on Schedule A, subject to the 7.5

percent floor for medical expenses.

Self-employment

tax Self-employed workers are eligible to deduct half the self-employment

tax paid, as a deduction from gross income. According to the IRS, this

is one of the most frequently overlooked tax deductions.

Job hunting

Costs associated with looking for a new job in your current line

of work are deductible as miscellaneous itemized deductions. Deductible

job-hunting expenses include the costs of preparing and printing your

resume, employment agency fees, automobile and travel expenses, phone

calls, and any other expenses related to your attempt to land a new job.

Note that you can't take a deduction if you are searching for your first

job or looking for one in a new line of work.

Job-related

clothing expenses ­- The cost of clothing you buy for your

job that cannot also be used for general wear is deductible as a miscellaneous

itemized deduction, as is the expense of laundering and dry cleaning such

clothing.

Closing

costs Most closing costs incurred in buying a house are not deductible.

However, check your settlement statement for property taxes or mortgage

interest (and possibly points) you paid at the closing that may not show

up on the year-end statement from your lender and be sure to deduct those

amounts.

Tax planning

and preparation Fees you pay for tax planning and preparation,

for example to your CPA, are deductible as miscellaneous itemized deductions

subject to the 2 percent floor.

Early

withdrawal penalties If you made a premature withdrawal from

a certificate of deposit or time saving account, you can deduct the amount

of any penalty you pay even if you don't itemize your deductions.

Bad debts

A bad debt is deductible as a short-term capital loss on Schedule

D in the year that the debt becomes totally worthless. You will need evidence,

such as a signed loan agreement, that the money you lent your relative,

friend or business associate, was actually a loan and not a gift. To cover

yourself in the future, be sure you get a signed loan agreement stating

the payment terms and interest rate and be sure to document your collection

efforts.

Appraisal fees for charitable donations Fees that you pay

to determine the fair market value of donated property can be claimed

as miscellaneous itemized deductions on Schedule A.

Old clothes,

furniture and other items donated to charity

You can generally

deduct the fair market value of non-cash contributions to Goodwill, your

church, or any other qualified charitable organization. If you're in the

28 percent tax bracket, a $1,000 contribution of old clothes means $280

in your pocket. Just be sure to get a receipt from the charity to substantiate

your donation. You can also deduct mileage at a rate of 14 cents per mile

in 2000 if you use your car in connection with volunteering for a qualified

non-profit.

CPAs remind

you that, at higher levels of income, many itemized deductions are phased

out. The adjusted gross income levels at which the phase-out begins are

adjusted annually for inflation. For 2000, they are $128,950 for singles,

heads of households, and married people filing jointly and $64,475 for

married filing separately. However, medical and dental expenses, gambling

losses, investment interest, and casualty and theft losses are not subject

to the phase-out rule. This limitation is applied after any disallowance

of miscellaneous itemized deductions subject to the 2 percent rule has

been taken into account.

The GSCPA is

the premier professional organization for CPAs in the state of Georgia.

With over 10,000 members throughout the state, the purpose of the GSCPA

is to promote the study of accountancy and applicable laws, provide continuing

professional education, maintain high ethical and work standards, and

provide information about accounting issues to the membership and the

public. For more information, access our web site at www.gscpa.org.

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