The Salina Journal from Salina, Kansas on January 16, 1986 · Page 28
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The Salina Journal from Salina, Kansas · Page 28

Salina, Kansas
Issue Date:
Thursday, January 16, 1986
Page 28
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The Salina Journal Thursday, January 16,1986 PageTS Itemized deductions can reduce tax burden While the Internal Revenue Service encourages as many taxpayers as possible to use the simpler 1040A and 1040EZ forms, there will be millions of taxpayers who will find it to their advantage to itemize deductions on the 1040 form. Generally, you will benefit from itemizing deductions if you paid interest and taxes on a home you own, had unusually large uninsured medical and dental expenses during the year, made large contributions to qualified charitable organizations, or had major uninsured casualty losses. What this means is that you will probably have itemized deductions totalling more than the zero bracket amount for your filing status. Taxpayers who itemize deductions reduce their adjusted gross income by their excess itemized deductions. Excess itemized deductions is the amount by which total itemized deductions exceeds the zero bracket amount. For example, a married couple filing jointly, with itemized deductions of $5,640, would subtract their zero bracket amount of $3,540 from the $5,640 in order to determine their excess itemized deductions of $2,100. The adjusted gross income is reduced by the excess itemized deduction over the zero bracket amount. This amount is already incorporated into the tax tables and the tax rate schedules. Itemized deductions are non- business deductions. If you itemize your deductions, you must file Form 1040 and fill in Schedule A (Form 1040). Schedule A provides space for listing deductible medical and dental expenses, charitable contributions, taxes, interest paid, casualty or theft losses, and miscellaneous items such as union dues. If you itemize, you should keep a record of your deductible items, including canceled checks and receipts. This will verify your expenses should the IRS examine your return. It will also help you determine whether your itemized deductions are greater than your zero bracket amount. Taxpayers who itemize can take advantage of many deductible expenses. Here is a brief explanation of some types of deductions available. • Charitable contributions — Generally, you may deduct contributions given to any qualified organization established and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals; to certain organizations that foster national or international amateur sports competi- AND SALINA TAX SERVICE I SPECIALIZING IN •^ FEDERAL and STATE TAX RETURNS 318 W. Cloud • Salina, Kansas (Located North of Safeway Food Barn) OPEN: MOM. thru SAT. 9 am to 8 pm - SUN. 1 pm to 5 pm CALL 827-1304 ROSE LEEK It's that time AGAIN!!! We wish to take this opportunity to ask you to let us assist you in preparing your Income Tax returns. There have been changes in the Income Tax forms and Tax laws for 1985 and 1986. Please stop by the office. We have an "Income Tax Reminder and Deduction Finder" form to assist you in getting your 1985 tax information ready to bring with you. We will be looking forward to the privilege of assisting you with your 1985 Income Tax Return preparation. Call and make an appointment or walk in anytime between the hours of 9:00 a.m. to 8:00 p.m. Monday through Saturday and 1:00 p.m. to 5:00 p.m. on Sunday. We are proud to be celebrating our 10th Anniversary. It's been a pleasure working with you. Here's wishing you a great 1986!! Sincerely, Rosie and Staff R&JSalina Tax Service tion; to fraternal organizations if the contributions are used for charitable purposes; to veterans' organizations; or, to governmental agencies that will use the gifts exclusively for public purposes. This means you may deduct contributions to most religious organizations, community funds, Boy and Girl Scouts, the YMCA, the Red Cross, the American Cancer Society, CARE, Veterans of Foreign Wars, etc. You may not deduct contributions to civic leagues or chambers of commerce. If you donate property other than money, you must base your deduction on the fair market value of the property, that is, the amount you could reasonably charge if you were selling the property. Bear in mind a contribution is only a contribution at the time of its delivery. Pledges are not contributions until you make payment. Also, if a contribution results in a personal benefit, all or part of it may not be deductible. For example, if you buy a $50 ticket for a church benefit and receive a meal at the function worth $15, you can'only claim $35 as a charitable contribution. • Medical expenses — You may deduct the medical expenses you paid during 1985 to the extent that they exceed 5 percent of your adjusted gross income. If you were reimbursed by insurance or otherwise, that amount must be subtracted from your medical expenses. Payments for the diagnosis, cure, prevention, or treatment of a physical or mental illness are deductible as are payments for the purpose of affecting any structure or function of the body. Deductible medical expenses include your payments to doctors, dentists, psychiatrists, etc.; payments to hospitals for service, laboratory fees, x-rays, etc.; and, payments for eyeglasses, hearing aids and parts, dentures, crutches, etc. Things not allowed are trips taken to "get away from it all," even if advised by a doctor, health club dues, maternity clothes, and diaper services. Expenses for transportation es- sential to medical care such as getting to and from a doctor's office may be included in medical expenses. This includes taxi, bus, train, or plane fares. If you use your car, you may deduct the actual out-of-pocket expenses, such as gas and oil, or nine cents for each mile you use your car for this purpose. In addition, you may deduct parking fees and tolls. Be sure to keep track of your expenses and mileage. As of 1984, the one percent limit for drugs no longer applies, and deductible drugs will include only insulin and drugs that are obtainable with a prescription. • Interest—Interest paid during the year on a debt for which you are legally responsible is deductible. This includes such debts as a car loan, a bank loan, an educational loan, or a mortgage of your home. However, if in 1985, you prepaid interest allocable to any period after 1985, you can only deduct the amount of interest allocable to 1985 on your 1985 return. (See Item, Page T9) •V. '. « Tax-deferred account offers you advantage of money market earnings that are exempt from Federal income tax. Only $100.00 to begin and you may add $25.00 or even more at any time. For your convenience we offer automatic transfers from your checking account directly to your IRA account. Call today for more information. Ask about Investment Fund IRA RELIEF FRQMy Start Today With A Tax-Deductible IRA Account FIRST BANK AND TRUST CO. 825-221

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