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Tax Tips
Give your medical expenses a checkup
As you likely know, you can deduct qualified medical expenses — for yourself, your spouse and your dependents — to the extent that they exceed 7.5% of your adjusted gross income (AGI). But what you may not realize is the variety of types of expenses allowed. Some eligible expenses that may surprise you are:
- Acupuncture and chiropractic treatment,
- Noncosmetic dental treatment,
- Cosmetic surgery to correct the effects of an accident or disease,
- Vision correction surgery,
- Psychotherapy,
- Transportation to and from medical facilities,
- Meals for inpatient care and lodging essential to medical care (subject to limitations), and
- Special education needed to overcome a physician-diagnosed learning disability.
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Economic Stimulus Act of 2008
The $152 billion Economic Stimulus Act of 2008 has received a lot of attention for its “recovery rebates” and other personal tax incentives. But as part of its effort to jump-start the economy, the act also provides valuable incentives for businesses to boost their capital spending. Among other things, the act nearly doubles the limit on Internal Revenue Code Section 179 expensing and offers a 50% first-year depreciation bonus for certain business property and qualified leasehold improvements. This article reviews these incentives and reminds businesses that they are temporary, so eligible companies need to act quickly.
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Watch your step
Life insurance is a versatile financial planning tool. It provides a source of wealth to fund a variety of estate and business succession-planning strategies. And policies with an investment component offer tax-deferred growth, which you can use to supplement your other retirement savings. What’s more, under the right circumstances, a policy’s death benefits will be exempt from income and estate taxes. Careful planning is required to ensure that life insurance proceeds remain tax free. One misstep can trigger estate taxes, income taxes or both, drastically reducing the amount available for your loved ones. This article examines three slip-ups to avoid.
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Deferring capital gains taxes with a like-kind exchange
Taxes can be an obstacle even in a sluggish real estate market. If you’ve held property for a long time, it may be worth substantially more than you paid for it, even if its value has declined in recent years. Also, years of depreciation deductions may have reduced or eliminated your tax basis in the property. So if you’re planning to sell property and capital gains will be triggered, find out if a like-kind exchange is an option for you. Also known as a Section 1031 exchange after the relevant section of the Internal Revenue Code, a like-kind exchange may be able to help you defer — or even permanently avoid — capital gains taxes. This article explains how like-kind exchanges work and how taxpayers may save.
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Tax Tips
News items briefly discussed are some little-realized expenses that qualify for the medical expense deduction, making tax-free gifts using the annual gift tax exclusion, and using estimated tax payments to boost a company’s cash flow.
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