Deducting Cost of Tickets
If you were
lucky enough to win money in a lottery, you can deduct the
cost of your losing tickets for that calendar year as an
itemized deduction up to the amount of your winnings. If a
husband and wife file a joint return, their gambling
winnings and losses are pooled so that the losses of one
spouse are deductible against the winnings of the other up
to the amount of winnings.
Sharing a Winning Lottery Ticket
Who
will pay the taxes when you win the lottery pool? Form 5754,
Statement by Persons Receiving Gambling Winnings, has been
provided by the IRS to alleviate the problem of reporting
multiple ownership of lottery tickets. The form is prepared
by the person who actually receives the winnings and it
identifies all those entitled to a share of the winnings.
The federal taxes should already have been withheld by the
lottery.
Amounts Subject to Social Security and Medicare Taxes
For 2013, the total wage limit for amounts subject to Social
Security tax is $106,800. There is no limit for wages
subject to Medicare tax.
Health Savings Account - Deduction
If you made
contributions to a health savings account (HSA), you may be
able to take a deduction as an adjustment to income. You may
establish and contribute to an HSA if you are covered by a
high-deductible health plan. Amounts contributed to an HSA
belong to you and are completely portable. Every year the
money not spent stays in the account and gains interest tax-
free, just like an IRA. Unused amounts remain available for
later years (unlike amounts in Flexible Spending
Arrangements that are forfeited if not used by the end of
the year).
Medical Expenses - Itemized Deductions
If you itemize
your deductions, you may be able to deduct medical expenses.
You can deduct the amount that is more than 7.5% of your
adjusted gross income. Taxpayers are allowed to deduct
unreimbursed medical and dental expenses for themselves and
family members.
Medical Expenses - Long-Term Care
The costs of qualified
long-term care services can generally be included as medical
expenses. These costs include a part of the premiums for
qualified long-term care insurance. Long-term care insurance
premiums covering these qualified services are deductible as
medical expenses (subject to the 7.5% of the adjusted gross
income limit and certain age limitations).
Medical Expenses - Overlooked Deductions
Do not overlook
any medical deductions for which you may qualify. Hearing
aids, eyeglasses, contact lenses, hospital fees for nursing,
physical therapy, lab tests, and x-rays are all deductible.
The mileage to and from a doctor or dentist's office is
deductible at 24 cents per mile in 2013. Bus and taxi costs
incurred for traveling to and from medical appointments are
also deductible.
Medical Expenses - Maximize Your Deductions
If you file
Form 1040 and itemize your deductions, you may deduct
medical expenses that are over 7.5% of your adjusted gross
income. Careful tax planning may allow you to plan ahead so
that you could take more medical deductions during one tax
year instead of spreading them over two. For example, in a
year that you already have substantial medical expenses,
schedule and pay for your routine doctor or dentist
appointments by December 31 instead of early in the next
year.
Medical Expenses - Weight Control Treatment
The IRS has
recognized obesity as a medical disease. If you participate
in a weight loss program because your physician diagnoses
obesity, you may be able to deduct it as a medical expense
on Schedule A. General rules for deducting medical expenses
apply.
Miscellaneous Expenses #1
Various
expenses fall in the category of miscellaneous deductions.
Job-hunting, job travel, union dues, tax preparation, and
safety deposit box fees are all examples of miscellaneous
deductions. If you itemize, you can deduct the amount of
miscellaneous expenses that is over 2% of your adjusted
gross income.
Miscellaneous Expenses #2
Various
expenses fall in the category of miscellaneous deductions.
Appraisal fees for casualties, theft losses or charitable
contributions, depreciation on home computers used for
investments, and fees to collect taxable income are all
types of miscellaneous deductions. If you can itemize, you
can deduct the amount of miscellaneous expenses that is over
2% of your adjusted gross income.
Miscellaneous Expenses #3
Various
expenses fall in the category of miscellaneous deductions.
Hobby expenses, up to hobby income, can be taken as
miscellaneous deductions. You may also deduct legal fees
related to producing or collecting taxable income, doing or
keeping your job, or to collect taxable alimony. If you can
itemize, you can deduct the amount of miscellaneous expenses
that is over 2% of your adjusted gross income.
Nontaxable Income
There are certain
types of income that are not taxed and do not have to be
used to determine your taxable income. These include child
support payments, military allowances, veterans' benefits,
welfare benefits, and workers' compensation. A cash rebate
that you received for a car purchase is not considered
taxable income.
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