Tax Planning Should Be Year-Round Activity
-- Understanding lesser known tax credits and deductions can leave more in your wallet and less on your 2012 tax bill
-- Credits and deductions to explore include charitable donations, moving expenses, and job hunting costs
MINNEAPOLIS and ST. PAUL, Minn., Nov. 8, 2012 /PRNewswire/ -- With winter just around the corner and the 2012 tax season entering its final months, BMO Private Bank reminds Twin City residents to consider their taxes year-round and take advantage of all eligible tax credits and deductions before it's too late.
"There are many ways individuals can reduce their 2012 tax bills, particularly if they act before December 31st. By planning ahead, doing some research, working with a tax professional, and identifying the credits and deductions that apply to you, you can keep more money in your pocket," Steve Marsich, senior vice president, M&I Wealth Management, a part of BMO Financial Group. "Tax planning should be a year-round activity, not a last-minute afterthought."
Marsich identifies some tax credits and deductions that are often overlooked:
Charitable Donations: If you make a donation to a nonprofit, you may be entitled to a tax deduction on your federal and state return. Be sure to consult with your tax advisor regarding your specific situation.
Childcare Expenses: A portion of the fees for daycare, summer camp or boarding school for children under 13 can be deducted if both parents are working or actively looking for work.
Medical Expenses: You may be able to reduce your tax by claiming either all or part of an expense related to a medical impediment as long as you itemize. Among the lesser-known medical expenses are your Medicare premiums deducted from your Social Security payments, hearing aids, guide dogs for the blind, bathroom aids, contact lenses, an air conditioner to ease a severe respiratory ailment, household help for nursing services, incremental costs of acquiring gluten-free food products for those with celiac disease, exercise programs recommended by a doctor as a treatment for a specific condition, and tutoring services for those with a certified learning disability.
American Opportunity Credit: Depending on your income, you may be able to receive a tax credit up to $2,500 for college tuition and related expenses. With the cost of higher education continuing to rise, don't miss out on these tax savings credits.
Harvest Capital Gains in 2012: This one is dependent on no changes to tax laws that are scheduled to go into effect in 2013. If the Affordable Care Act is not repealed, then those with taxable income of more than $200,000 (or $250,000 if married filing jointly), will be subject to an additional 3.8% tax on investment income.
Moving Expenses: If you move more than 50 miles for a new job, expenses such as movers, renting a truck, cost of breaking a lease, storing furniture, legal fees, real estate commissions and the cost of food and hotels while moving can be claimed as deductible expenses.
Job Hunting Costs: If you are looking for a position in the same line of work you held previously and you itemize, you can deduct expenses associated with trying to land a new position. Out-of-town lodging, transportation, employment agency fees, business card and resume printing costs are all deductible. Unfortunately, this deduction is not available to first-time job seekers.
"With each of us trying to maximize the money we make, every little bit helps," said Marsich. Tax laws vary between states, so it's important to consult with a tax professional for your particular situation.
About BMO Private Bank, a part of BMO Financial Group
BMO Private Bank offers a comprehensive range of wealth management services that include investment advisory, trust, banking and financial planning to meet the financial needs of high net worth clients. Through integrated teams of experienced financial professionals, BMO Private Bank helps its clients realize their financial and lifestyle goals with solutions that are custom tailored and delivered with the highest level of personalized service.
BMO Private Bank is a brand name used BMO Harris Bank N.A.. Member FDIC. Not all products and services are available in every state and/or location.
Investment products offered are: NOT A DEPOSIT – NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY – NOT GUARANTEED BY ANY BANK – MAY LOSE VALUE.
SOURCE BMO Private Bank