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Tsunami Relief Contributions Paid in 2005
Millions of Americans contributed to charitable organizations providing relief to Tsunami victims. Typically, charitable contributions are deducted in
year they are made. New legislation, however, allows you to deduct Tsunami contributions you made in January 2005 on your 2004 tax returns. Alternatively, you can wait and deduct donation on 2005 returns. Unfortunately, you cannot deduct contribution on both!
Sales Tax Deduction
If you itemize deductions, you have a choice of deducting your state and local income taxes OR your state and local sales tax. This option is available for 2004 and 2005 tax years. If you live in a state that does not collect income tax, optional sales tax deduction should be claimed for significant tax savings. See IRS Publication 600 for more information.
Deduction for Discrimination Lawsuit Costs
If you were required to pay attorney’s fees and court costs associated with a discrimination lawsuit, you may be able to claim a tax deduction. The deduction is available only for costs and fees incurred after October 22, 2004 in relation to a judgment and settlement. The deduction is not limited by alternative minimum tax. Realistically, this deduction will be more viable for 2005 tax year, but a few taxpayers may be eligible this year.
There are numerous deductions and credits available if you take time to look for them. Taxes can be confusing, but savings justify time and effort of finding all available deductions and credits.
Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
