CPA Corner
Tax Deductions: Tax Deuction Tips 2005 / 2006
By Ryan M. Hoback
11/26/05, 05:08

Did you remember to file your 2004 tax return or extension? April 15th has come and gone. Did you realize there are new tax deductions available to all taxpayers for 2004 that may have been of benefit to you?

The American Jobs Creation Act of 2004 gives taxpayers the option for 2004 and 2005, to claim a state and local tax deduction for either sales or income taxes. While this deduction will mainly benefit taxpayers with a state or local sales tax but no income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming). It may give a larger deduction to any taxpayer who paid more in sales taxes than income taxes. For example, you may have bought a new car, boosting your sales tax total, or claimed tax credits, lowering your state income tax.
The IRS provides optional tables for use in determining the deduction amount, relieving taxpayers of the need to save receipts throughout the year. Sales taxes paid on motor vehicles, boats, and home-building materials, may be added to the table amount. In calculating your tax liability the sales and local tax amounts should be included on Schedule A, itemized deductions with your real estate taxes, mortgage interest, medical expenses, etc. In addition to the above there may be additional deductions that you could have taken advantage of.

Did you donate cash to a charitable organization after December 31, 2004 ? Like many Americans, you may have opened your heart and your pockets. Now, thanks to a new tax law, many taxpayers can claim special tax benefits. Taxpayers who give cash by January 31, 2005, to a qualified organization for tsunami relief can claim the deduction on their 2004 tax return, if they itemize their deductions. This is an exception to the normal rule that deductions can be claimed only for the year paid.

If you have already filed your taxes and the above-itemized deductions were omitted, you can always file an amended tax return. In order to ensure that your tax liability is minimized, please consult with your tax advisor that none of the available deductions to you are omitted.