While there are several updates and changes that Congress has enacted, this post deals with Itemized Deductions on Schedule A.
If you elect to itemize your allowable personal deduction items on Schedule A then there are a few deductions that have been extended for 2013 and scheduled to expire at the end of 2013. One item is the sales tax deduction for those taxpayers who do not pay any or little state income taxes. Therefore, based on Tables established by the IRS you may be able to deduct the sales taxes paid on your consumption of goods and services. In addition to the Standard Table amounts you can also deduct the sales tax paid or incurred on big ticket items such as automobiles, boats, building materials, etc. You will need to have your receipts in order to deduct and verify the sales tax deduction. Contact us for more information.
The other Schedule A itemized deduction that is extended and scheduled for expiration after 2013 is the deduction for Mortgage Insurance Premiums (PMI). If you have a mortgage and are paying PMI then you could be eligible for this deduction. The deduction does have a phase-out provision once your Adjusted Gross Income (AGI) reaches $100,000. It is completely phased out when your AGI reaches $110,000. If you fall into this category, it’s an opportunity worth further discussion with us.
Other changes enacted by Congress will be covered in subsequent posts.