Wise Planning: Taking Advantage of Deductions
One of the major objectives of year-end planning is to keep as much income as possible from being subject to income tax. Astute use of tax deductions can reduce your taxable income,leaving you with more after-tax cash. Deductible expenditures include:
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Taxes - State and local income taxes,real estate taxes and some personal property taxes can reduce your taxable income.
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Mortgage interest - Interest paid on a residence typically is deductible,unlike consumer interest such as car loans and credit card interest.
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Medical expenses - You can deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income.
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Retirement plan contributions - The amount you put into retirement plans reduces your taxable income (subject to certain limits).
