Archive for deduction
Charitable Giving Statistics
Posted by: | CommentsAmericans give billions of dollars per year to charities. In fact, charitable deductions in 2002 totaled over $136 billion. According to the IRS Statistics of Income Bulletin (winter 2003-04), here are the average breakdown of claimed deductions for charitable contributions on 2002 tax returns:
- Taxpayers with Adjusted Gross Income between $15,000 to $30,000 averaged charitable contributions of $1,890.
- Taxpayers with AGI between $30,000 and $50,000 averaged $2,006 in charitable contributions.
- Taxpayers with AGI between $50,000 and $100,000 averaged $2,530 in charitable contributions.
- Taxpayers with AGI between $100,000 and $200,000 averaged $3,875 in charitable contributions.
- Taxpayers with AGI over $200,000 averaged $17,354 in charitable contributions.
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Dealing with medical expenses
Posted by: | CommentsEscalating medical costs leave even insured families left to cover increasing out-of-pocket costs. While there are a number of strategies for small businesses and self-employed individuals to deduct the cost of health insurance coverage, the tax code also provides some relief allowing taxpayers to deduct medical costs.
Anyone who has prepared their own tax return is probably familiar with the rule that out-of-pocket deductions are generally only deductible if they exceed 7.5% of the adjusted gross income (AGI). But for taxpayers who are subject to the Alternative Minimum Tax, medical expenses are only deductible in excess of 10% of their AGI. This means that many higher income taxpayers are unable to take any medical expense deduction.
One terrific, if under-utilized fringe benefit that the tax code allows is for the use of a Medical Reimbursement Plan by small business corporations. If a corporation sets up an uninsured medical reimbursement plan to pay for non covered medical costs, the direct payment of medical expenses is not taxable to the employees for coverage for employees, spouses, and dependents. The only exceptions to this rule are for owners of more than 2% of S corporation stock, and payment of expenses for domestic partners. For the company providing the medical reimbursement, the payment of medical expenses are dedeductible from the first dollar.
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