!!%$#@! Deductions!

That was the subject line from a reader’s e-mail the other day.

She was
at wit’s end trying to find and decipher information on potential tax
breaks.

As truly empathetic as I am to her plight, I must admit that her e-mail
not only jumped out at me from all the other missives crowding my
e-mail box, it also cracked me up!

Most of us curse. Many of us curse way too much. And few of us need to chew on that bar of soap my mother always threatened.

But the reality of life in the 21st century is that questionable language is here to stay.

An Amazon search of the word “cursing” resulted in 19 books on the
subject. "Profanity" netted 18. “Swearing” turned up 55, although some
were volumes on swearing someone into an office (which itself might prompt cursing; more on this later.)

Google needed only 0.21 seconds to present me with "about 10,100,000" results for cursing.

Cable television has revised the seven dirty words (be advised: the seven and other explicit ones are in this link) of a
generation ago to five or fewer, depending on whether you subscribe to
basic or premium channels. Expletively creative writers have even come up with new TV-acceptable terminology; every sci-fi nut clearly knows what frack and frell mean. Heck, non-sci-fi freaks do, too, for that matter.

Parental warnings let you know when you’ll hear offensive language on CDs.
Or you can listen to them in full on satellite
radio, where you’ll also find
Howard Stern and his ilk shouting anything they want to the universe.

Even our national leaders sometimes feel cursing is a useful legislative
tool. Will we ever let VP Dick Cheney forget his Senate floor outburst? Nah.

Sometimes foul language is caused by a medical condition (Tourette’s; Jim Eisenreich
Foundation).

Often it’s attributable, though
no more excusable, to age, from youngsters wanting to shock authority
figures to seniors who feel they’ve been around long enough to do what
they damn (or worse) well please.

Expletives are so much a part of our lives that, according to this ABC
20/20 report, as a society we have become desensitized. Ergo, my chuckle at
the frustrated reader’s self-censored but clearly recognizable epithet.

My reaction also can probably be explained by the context of the
implied words. The 20/20 piece notes that the setting in which foul
language is used is a major determinant in whether, or how much so, a
person finds particular words offensive.

It’s no big surprise then, that tax season
seems to ramp up the profanity barometer.

So, in an attempt to ensure that my e-mailing reader and the rest of
you blog visitors don’t have to resort to further bleeping language as
you search for tax breaks, Today’s Tax Tip looks at some !!%$#@! itemized deduction options.

Schedule A breaks: When most of us hear the word deduction, we think of
itemized expenses detailed on Schedule A. This 29-line form does indeed
offer many opportunities to whittle down taxable income.

But in some cases, you must meet specific requirements before you get the benefit of the deduction.

This is the case with the first section of Schedule A, medical and
dental expenses. Your total costs in this area must come to more than
7.5 percent of your adjusted gross income.

So if you make $50,000 you
have to have medical deductions of more than $3,750 to get any tax use
from them. Note the phrase "more than." You can only deduct the amount
that’s in excess of the percentage threshold, so if you make $50K and
have $4,000 in expenses, your allowable deduction amount is only $250
here.

There are some items you can use to reach and surpass the
threshold: insurance co-pays,
treatments not covered by insurance, some long-term care policy
premiums, mileage and some other travel expenses for treatments. Even
some home improvements might count here. You can find details in this story.

The next section is for nonfederal
taxes you’ve paid. If you live in a state with an income tax, and most
people do, you can count those payments here. For 2005 returns, you
also have the option of using sales taxes instead.
Don’t forget to deduct real estate and personal property taxes, and even foreign taxes you
might have paid.

Every homeowner
knows about the mortgage interest section of Schedule A. You also might
be able to deduct points you paid to get a better loan rate, as well as
home equity loan interest. The lesser-used deduction for investment
interest also might help some filers. Details on that option can be found here.

Giving to your favorite charity can pay off at tax time if you itemize.
There are the usual monetary gifts, as well as clothing and household
goods you no longer need; even your old car could be a useful deduction,
although the rules on auto donations were tightened this year.

But other ways you
help nonprofits could help you, too: gifts of appreciated stock, the
miles you put on your own car delivering items to the homebound,
even the uniform you wear as a hospital volunteer might add to your
tax savings. Find out more in this story.

Damages you suffered in a natural disaster are deductible (to a point).
But you don’t have to live through a hurricane to claim a loss. The IRS
says any loss of or damage to property from a sudden, unforeseen event
counts. Find out more here.

Then there are miscellaneous deductions. The first segment of such write-offs on
Schedule A is another limited one; you must have expenses that
total more than 2 percent of your adjusted gross income.

But there are
lots of things you might be able to count, such as unreimbursed
employee expenses, investment related costs (the fee for the safe
deposit box where you keep your stock certificates), even what you paid
to an accountant or for computer software to do your taxes.

Finally, "other miscellaneous deductions" is where you can write off,
sans a percentage threshold, several relatively arcane expenses. One
common one, though, that’s allowable here is gambling losses.

Just remember: You can only expense your poker, racetrack and lottery
losses to the extent that you won money. If you didn’t hit any
jackpots, all your money that stayed in Vegas with everything else
won’t do you any deduction good.

Once you tally up all your Schedule A amounts, if they come to more
than your standard deduction (on 2005 returns that’s $5,000 for singles,
$10,000 for married couples filing jointly and $7,300 for heads of
households), then claim your itemized deduction amount on your 1040.

And if you don’t have enough to itemize, don’t despair. In my next blog
entry I’ll look at some deductions you might be able to take without
ever having to look at a Schedule A.