As the tax time approaches, we are all faced
with similar questions; which deductions can I claim and what
to report as income? Following are some tips that answer some
general tax questions regarding insurance on a personal or
business level.
1. Vehicle as a deduction: You
can claim a deduction on your vehicle if you use it for
business purposes. You can a claim deduction in two ways
either on its actual expenses or its mileage. But remember;
only one can be chosen and you cannot change your choice
in later returns. You can also claim deductions for depreciation,
gas, oil, tires, licenses, repairs and the related; and
your insurance premiums.
2. Deduct your health and long-term care
insurance premiums: If you are a self-employed you can deduct
100% of health and long-term medical costs for yourself,
your spouse, and other dependents. However, you can claim
this deduction only if you or your spouse is not covered
by an employer health insurance plan. It can only be taken
as an adjustment to income.
3. Deduct medical expenses: You may be able to deduct certain
medical expenses including health insurance and dental insurance
premiums along with some amounts paid for long-term care
insurance contracts. This deduction is limited to costs
over 7.5% of one's income.
4. Schedule your medical procedures and expenses for the
maximum deduction: Schedule and pay for procedures before
December 31 of the tax year, since certain medical expenses
are limited to costs over 7.5% of one's income in that year.
5. Miscellaneous insurance expenses that can be deducted:
Various miscellaneous expenses amounting over 2% of one's
adjusted gross income may be deductible for some persons.
Examples of such expenses are – non-reimbursed employee
malpractice insurance and liability insurance premiums,
appraisal fees for casualty losses not reimbursed by insurance,
safe deposit box rentals to store investment papers such
as insurance annuities. If a retiree is deceased before
the entire investment is recovered the remaining investment
in an insurance annuity and may be deducted from a retiree's
tax return.
6. Deduct any job-related moving and storage expenses: You
can claim certain moving expenses including the cost of
storing and insuring household goods and personal items.
However, eligibility criteria requires 30 consecutive days
after the items are moved from the previous home and before
they are delivered to the new home.
7. Check your previous tax returns for the above insurance
deductions: When tax amendments are introduced sometimes
one can claim deductions or refunds on pervious tax returns.
You would be required to file additional copies of previous
year's tax returns which can be easily purchased from the
IRS.
8. Report unemployment insurance benefits: If during the
tax year you have received any unemployment insurance compensation
whether federal or state, you should report it, as it is
considered to be taxable income.
9. Casualty and theft losses reimbursed by insurance: You
can claim deductions on any damages from losses due to perils
on your home such as floods and tornadoes, and losses due
to damage to one's automobile. However these deductions
have to be itemized and if you have received any insurance
then you need to first reduce any insurance amount received
+ $100 and then the loss must furthermore be reduced by
10% of one's adjusted gross income.
10. Don't report worker's compensation insurance benefits
as income: Note that worker's compensation along with child
support payments, military allowances, veteran's benefits,
welfare benefits and cash rebates from a car purchase are
not considered taxable income.
