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(Part of a series of articles on charitable giving and the Union County Foundation by David Vollrath - Executive Director) Taxes are one of the unavoidable consequences of living. This is the time of year that many of us scramble to "pay unto Caesar what is Caesers." Most of us hope to give "Caesar" as little as we legally can. As a result of the standard deduction increasing in recent years it is documented that now only about 1/3 of Americans itemize their deductions. So the question is how can you save taxes even if you don’t itemize? Qualified tax deductions above and beyond the standard deduction level are often times called "above the line" deductions. These types of deductions work in two main ways. First they lower your adjusted gross income and second, (as a result of that lower adjusted gross income) you may more likely qualify to receive the full benefit of certain tax provisions. For example if an individual files a single return with adjusted gross income over $75,000 they will lose the child tax credit. In this example deductions that lower the adjusted gross income to a level less than $75,000 may help the filer retain the child tax credit. Let’s talk about several "above the line deductions." Educators who teach at least 900 hours per year in K-12 may deduct up to $250 of qualified expenses. If you have a traditional IRA (not a Roth IRA) you may qualify to deduct up to $3000 of contributions for both yourself and your spouse. To qualify you must have earned income equal to the amount of the deduction. If you are 50 or older you may contribute and deduct up to an additional $500. Some student loan interest may be deductible "above the line." Consult your tax advisor for restrictions and limitations. If you change jobs to a workplace that is at least 50 miles farther from your home than your old job, you may deduct your moving expenses less any employer reimbursements. Also funds paid as alimony, but not child-support, may be deducted above the line. Another way to reduce your taxes even if you do not itemize is to fund a charitable gift annuity. A charitable gift annuity pays you lifetime income at a fixed rate and upon your death benefits the charity(s) of your choice. A significant portion of the income stream you receive from the charitable gift annuity is tax free thus minimizing your taxable adjusted gross income. The Union County Foundation is equipped to help you achieve your charitable goals by providing as a free service pertinent information, charitable life income plans, and assistance with planned giving and estate planning. Please call us at 937-642-9618, email us at commfounduc@imetweb.net, or stop by our Marysville office at 126 N. Main St. We are committed to helping you…. "preserve your footprint in time." |
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