It's tax day in the U.S. and you could have had another deduction if you had just agreed to host a foreign exchange student in 2010. Or gone whaling in Alaska.
This year, new mothers can write off breast pumps and those adopting a child get a bigger credit for expenses, according to the
Internal Revenue Service.
“It shows you how complex the tax code is,” Mark Steber, chief tax compliance officer for Jackson Hewitt Tax Service Inc., said of the various deductions available. “It's a deduction when it's for you, it's a loophole when it's for that other guy.” The tax preparer is based in Parsippany, New Jersey.
Individuals must file their taxes by midnight tonight and the IRS expects about 141 million returns this year, according to a statement. Deductions on individual returns totaled about $2 trillion in tax year 2009, a 2.1 percent decrease from 2008, IRS preliminary data show. Taxpayers set a record this year with almost 101 million returns filed electronically as of this morning, the agency said today.
Taxpayers may be able up to deduct up to $50 a month of expenses for hosting a foreign or American student, according to the IRS. The student must be in 12th grade or lower at a school in the U.S. and can't be a relative or dependent.
Whale of a Deduction
If that doesn't have appeal, try whaling. Up to $10,000 a year in costs such as maintaining boats or acquiring gear for sanctioned bowhead whale hunting may be deducted as a charitable contribution, though only if you are recognized as a captain by the Alaska Eskimo Whaling Commission, according to the IRS. Jackson Hewitt, with five franchises in the 49th state, has seen the deduction, said Steber, whose department monitors “out of the norm returns.”
The deduction for costs of breast pumps and associated supplies may be claimed if an individual's total medical expenses exceed 7.5 percent of adjusted gross income, the IRS said in February.
The health-care reform bill passed by Congress in March 2010 increased the amount taxpayers may take as a credit for adoption expenses to a maximum of $13,170 per child, compared with $12,150 in 2009. The Affordable Care Act made it refundable so families get the credit even if they owe no tax. The amount is reduced for those with a modified adjusted gross income of more than $182,520, and isn't available for adjusted incomes above $222,520.
Tax Overhaul
President Barack Obama said last week he wants Congress to overhaul the tax code as part of a $4 trillion deficit-reduction plan. The proposal would let tax cuts affecting high-income taxpayers expire at the end of 2012 to increase revenue, and would raise $1 trillion in part by curtailing certain tax breaks.
Those who can't meet today's deadline can request a six- month extension using Free File or Form 4868. About 7 percent to 8 percent of taxpayers generally do so, said IRS spokesman Eric Smith. While the extension provides additional time to file, individuals are still required to pay any estimated tax owed by April 18 to avoid possible interest and penalties.
Don't forget to electronically or hand sign and date the return, as an unsigned return may delay any refund, the IRS said.
--Bloomberg News--
