23 Cash Rebate Programs Hidden in the Tax Code

We believe that you probably feel you’re paying too much in taxes.

According to a Fox News poll, a record number of American voters think they pay too much. In fact, 63% of Americans believe their tax bill is too high.

In addition, they think government is more often the source of America’s troubles – not the solution to them.

When it comes to the IRS, that’s definitely the case. Multiple studies show that millions of Americans overpay their taxes every year simply because they don’t understand the tax code.

Well, here’s an opportunity to use the tax code to your advantage…

In this report, we give you 23 ways to collect cash rebates… using programs, tax breaks and loopholes provided in the IRS tax code.

You see… locked away in those 74,000 pages that make up our tax code are tons of programs that can hand you tens of thousands of dollars EVERY year. Most Americans have no idea they exist.

On top of that, on December 20, 2017, Congress passed the most sweeping legislation of the Trump era: the tax reform bill. The legislation is titled the Tax Cuts and Jobs Act. The law covers hundreds of new rules, plus changes to existing taxes and exemptions.

Most importantly, buried deep inside the act is a program that gives 121 million taxpayers the right to collect a “consumer bonus” on purchases made over the course of a year.

You can collect a consumer bonus based on how much you spent in 2021, how much you spent last year, how much you’ll spend this year, how much you’ll spend in 2024 and how much you’ll spend in 2025!

What makes the Tax Cuts and Jobs Act so significant for you is that it includes dozens of measures that provide tax relief for families and individuals.

Now, before we begin, this is not to be considered legal or tax advice. You should consult your CPA or attorney about your eligibility for these programs.

And now, without further ado, here’s how YOU can collect on some of these programs.

Program No. 1: You Can Deduct Thousands From Your Taxes Every Year… Until 2025

This is the provision in the Tax Cuts and Jobs Act that will undoubtedly have the biggest impact on taxpayers.

The Tax Cuts and Jobs Act makes a unique tax break a permanent feature of U.S. tax law. That tax break is the option to claim an itemized deduction for state and local sales taxes instead of an itemized deduction for state and local income taxes.

Some of you may be able to deduct thousands…

That’s because the act gives all American taxpayers the chance to deduct the sales tax paid on virtually every purchase.

Whether it’s a pair of new shoes… a hotel bill while on vacation… meals out… or big-ticket items like cars or boats…

You can total up the sales tax on all of it and use it to get a very large deduction on your taxes.

The sales tax deduction is particularly welcome by taxpayers in states that do not collect income taxes but do levy state sales taxes. However, it also could benefit any taxpayers who face substantial local sales taxes.

Even some residents of states with both types of taxes might find the sales tax deduction more valuable than the income tax write-off.

But there’s no doubt the deduction is a boon for itemizers (to claim the sales taxes you paid, you must itemize) who live in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Those are the seven states that don’t impose an income tax but whose residents pay sales taxes. It also may benefit many residents of Tennessee and New Hampshire, which tax interest and dividend income but not wages.

Plus, it’s simple to take advantage of…

You can base the amount of the deduction either on actual purchases or on a government formula.

Even if you don’t have documentation or receipts, you can still use the sales tax deduction.

The IRS provides special sales-tax tables, one for each state. The IRS calculates the deduction amounts for you based on the average consumption by taxpayers, taking into account filing status, number of dependents, adjusted gross income (AGI), and rates of state and local general sales taxation.

Having the choice of which method to use could be a blessing for all filers. If you have a year during which you make several big purchases, the deduction of the state and local sales taxes could be greater than that of state and local income taxes.

And if you have documentation…

The maximum deduction for all of your taxes, including the sales tax deduction, is $10,000 if you itemize your deductions.

So look back at your credit card statements and total up the biggest purchases. Gather up the receipts if you have them, and when you do your taxes, make sure to include all of them to get the biggest tax return possible.

For some people, this single deduction could add thousands to the amount they receive.

We recommend that you first go to this website to see how much you might collect this year.

Click on “Use the Sales Tax Deduction Calculator” and then answer a few questions about yourself.

Next you will select the year you are filing for. You’ll need your AGI, which you can find on your Form 1040. You’ll also need any nontaxable items, such as…

• Tax-exempt interest
• Veterans benefits
• Nontaxable combat pay
• Workers compensation
• The nontaxable part of Social Security and Railroad Retirement benefits
• The nontaxable part of IRA, pension or annuity distributions (do not include rollovers)
• Public assistance payments
• Any other nontaxable items.

If you’re married and are filing separately, do not include your spouse’s income. And please note, these definitions may change from year to year.

Next you need to select the number of exemptions you will claim on your return. And then you can fill out the amount you paid in sales tax for the year.

Enter your ZIP code in the next step, and then verify your city or county. You will then be asked if you moved to a new residence for the filing year. Answer yes or no, and then confirm that all the information you entered is correct.

The calculator will list the total general sales tax deduction (rounded to the nearest dollar). This is the number you will enter on Schedule A, line five, if you are indeed itemizing your deductions.

Writing off sales tax – along with other itemized deductions – involves using a Schedule A (Form 1040). For instructions on how to fill out this form, click here.

The fact is… you have money sitting on the table ready to be picked up.

And another important point: This opportunity applies retroactively. You can potentially use this deduction for your 2021 and 2022 taxes… just file an amended return.

But before you take one step further, speak with your tax preparer. They can walk you through this process. Just make sure they know you want to get the maximum amount possible out of this program.

Program No. 2: “The $79,687 Social Security Loophole”

Nearly 90% of individuals over age 65 rely on Social Security income to pay for a large portion of living expenses throughout their retirement years. In fact, Social Security makes up about 33% of the income of older Americans.

Figuring out the best way to maximize your benefits is critical if you want to enjoy your retirement years.

Although Social Security is an inevitable part of most individuals’ retirement planning, you may not be fully aware of how and when those benefits are taxed. But you should be… because it can make a huge difference.

If combined income for a single individual is above $25,000 but below $34,000, or above $32,000 but below $44,000 for married couples, 50% of Social Security benefits are taxed. Combined income above these maximum amounts results in benefits taxed up to 85%.

Keeping Uncle Sam’s tentacles off your Social Security income can make the difference between traveling around Europe and struggling to feed yourself.

In fact, over the life of Social Security, you can get an extra $79,687 in benefits if you simply manage how, when and from where you receive income.

Most couples don’t want the type of lifestyle that comes with an income of just $32,000. They need, or want, a level of income that will let them travel, dine out when they want and generally enjoy a comfortable lifestyle. They can do that by avoiding paying taxes on their benefits, and living comfortably is possible. Here’s how to do it…

If you’re receiving Social Security benefits, you can get creative to avoid reaching or exceeding the relatively low combined income limits.

Instead of taking distributions from a traditional IRA or other pretax retirement savings plans, such as an employer-sponsored 401(k) or 403(b), take distributions from a Roth IRA. Because Roth IRA distributions are made with post-tax dollars, withdrawals are tax-free in retirement. You can also withdraw from your savings accounts or certificates of deposit, and you won’t have to pay tax on this income either.

So if you are approaching retirement, think about doing a Roth conversion. But be aware that you’ll pay income tax on the conversion, so balance this against other deductions you could take.

Program No. 3: “The $1,920 Retiree Cash Rebate”

This is a great one for anyone over 50.

It’s found in Section 408 of the tax code. And it’s another one we like because it rewards people who use the tax code to their advantage and make the effort to save a little more money.

In short, if you’re over 50 years old, you can make catch-up contributions in your 401(k) or 403(b) account. These catch-up contributions can save you upward of $1,000 in extra cash every year at tax time.

Here’s how it works… It’s all about maxing out your 401(k) contribution. Anyone 50 or older is allowed to contribute an additional $7,500 to their account, which lowers their gross income and reduces their tax liability.

If you are under age 50, the most you can contribute to your 401(k) plan is $22,500 annually. If you’re 50 or older, you can add a catch-up contribution of $7,500 annually for a total of $30,000.

A worker in their 50s or 60s who maxes out their employer-sponsored retirement account could reduce their tax bill upward of $1,000 if they’re in the 32% tax bracket. Income tax won’t be due on the contributions until the money is withdrawn from the account.

Program No. 4: The $2,000 Saver’s Rebate

This one’s a bit of a shocker.

In 2002, legislators were looking for ways to encourage Americans to save more money.

And with good reason… The median American household has only about $5,300 in savings.

So Congress passed a law saying that “savers” could actually collect a cash rebate each year… in exchange for socking a little money away for a rainy day. Congress made the program permanent in 2006.

And now many people who elected to save money in a retirement plan are eligible to receive up to a $2,000 cash rebate for doing so.

You just fill out a form along with your taxes. The form is called Retirement Savings Contributions Credit (or “Saver’s Credit”). This is a tax credit available to anyone making contributions to an IRA or employer-sponsored retirement plan.

The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA contribution, up to $2,000 ($4,000 if married and filing jointly), depending on your AGI (reported on your Form 1040 or 1040A). Go to the IRS website to see what the current AGI limits are.

Program No. 5: Increase Your W-4 Withholding Allowances and Give Yourself an Instant Raise

Most people are thrilled when they get a big tax refund check back from the IRS.

They shouldn’t be. That just means the IRS has been using their money all year…

Your W-4, the wonderful IRS form you filled out so the government can get its hands on your money every payday, is going to become your new best friend… It’s going to give you a raise. Like almost everyone, you fill out your W-4 and add your spouse and perhaps a child or two as deductions.

But if you are consistently getting a huge refund check back from the IRS, you need to make some changes. The secret is about taking back YOUR OWN MONEY and not giving Uncle Sam an interest-free loan any longer. You can do this by simply increasing the number of deductions/allowances you are currently taking to keep a bigger portion of each paycheck for yourself.

You should aim for zero difference between the amount the IRS has withheld and the amount that you actually have to pay in taxes. Basically, answer the W-4 Form allowance questions honestly and precisely, based on what your situation dictates. You just need to walk through each of the questions in detail. You can even consider the additional worksheets on the back for itemized deductions and two-income earners. And remember, you will need to complete a W-4 Form each time your situation changes, not just when you’re hired.

You will need to go through the human resources department at your place of work and ask to update your W-4. The idea is simply to adjust the number of dependents or allowances so LESS is taken out of your paycheck every pay period. There… you’ve just given yourself a raise. That’s how easy it is. No more free loans to Uncle Sam. Now you get to use and invest your money for the full year.

Program No. 6: The World’s Greatest “Tax Refund” – How to Essentially Pay Your Taxes With Gold (and Keep the Gold!)

We want to tell you about a secret that could make you thousands each year.

As crazy as it sounds, you can claim this cash using a government loophole that gives preferred treatment to gold and precious metals. Using this little trick will allow you to essentially pay your taxes with gold. But there’s a second part to this secret. And it’s the real kicker…

After you’ve reduced your tax liability enough to cover your tax bill, you then get to keep every ounce of the gold you just used to pay your taxes! This strategy works because there is no wash-sale rule for gold and precious metals.

In other words, you can “sell” it, lock in a tax loss and immediately buy back the same gold. There is no 31-day waiting period before you can repurchase as there is with stocks. It effectively allows a person who bought gold at a higher price to use today’s lower prices to lock in a tax loss on gold without giving up physical ownership of it.

Depending on what your estimated tax burden is, you sell enough gold to cover that amount. The gold is then immediately bought back. It’s the best of both worlds. You’ve taken care of your tax liability and kept your gold, and you can benefit from any sudden upturn in prices.

Program No. 7: Rake In 29% Returns (Every 12 Months) With Practically No Risk!

There are few layups in the investment world. So when you see one, YOU MUST TAKE IT.

This one is a guaranteed 29% return, instantly, with no risk. But you’d be surprised how many people overlook or underfund this opportunity.

Here’s the “secret”: You must always – with NO EXCEPTION – fund your IRA to the maximum allowable amount. Here’s why…

Let’s do the math together.

In 2023, a traditional IRA allows for a maximum of $6,500 ($7,500 if you’re age 50 or older) to be deposited each year. We’ll assume that you are in the 24% federal tax bracket and that your state has a 5% income tax, for a combined income tax rate of 29%.

Let’s say your annual taxable income is $60,000. Your tax on this would be $17,400 ($60,000 x 29%). Put the full $6,500 into an IRA, and your taxable income becomes $53,500. Your tax on that would be $15,515, which is $1,885 less.

That’s EXACTLY like making 29% without any risk ($1,885 divided by $6,500 equals 29%).

Program No. 8: How the Government Will Pay You $5,000 to Sit In on an Eight-Hour Course

This money-grabbing strategy simply involves letting your state or the federal government help you purchase a house.

There are a slew of homebuying incentives and rebates offered by our federal and state governments to help various homebuyers. You just have to find out what you might be eligible for.

Let’s say a co-worker in Maryland is a first-time homebuyer. They are eligible for a tax credit. A Maryland HomeCredit can save them tens of thousands of dollars throughout the life of their loan.

When combined with a home loan through the Maryland Department of Housing and Community Development’s Mortgage Program, the Maryland Department of Housing and Community Development offers down payment assistance as well as a 30-year fixed interest rate.

The Maryland HomeCredit doesn’t save you money on the purchase of your home. Instead, it provides eligible homeowners with a federal tax credit that reduces the federal tax liability owed.

The value of this tax credit is 25% of the value of mortgage payments up to $2,000, and the credit can be claimed every year that you own your home.

In addition to grants and loans from the U.S. Department of Housing and Urban Development (HUD), most states offer their own programs. You’ll have to check to see what your state offers in addition to what might be available from Washington.

Here are some examples…

HUD’s Good Neighbor Next Door initiative offers a 50% discount on the list price of eligible properties for law enforcement officers, firefighters, emergency medical technicians and teachers purchasing homes.

HUD’s Dollar Homes initiative provides low- and moderate-income families an opportunity to purchase qualified HUD-owned homes for $1 each.

And the list goes on… If you’re planning on buying your first home, make sure you’re not leaving money on the table by not taking advantage of these programs. Look into what your state offers.

Program No. 9: How to Eliminate Probate Fees and Estate Taxes With One Easy Strategy

This strategy will require some legal help. It’s all about getting your financial house in order. This means wills, trusts, partnerships, etc.

But the value of doing it is unquestionable. Depending on what state you live in, probate fees and costs can take anywhere from 3% to 8% of your assets. Estate taxes can be as high as 40%.

When it comes to avoiding probate fees and estate taxes, it’s best to leave it to the experts. That’s exactly what we suggest here.

That’s why we recommend contacting Jack Cohen…

While he did not prepare this report, he has spent his entire career involved with federal taxes. After spending 33 years working for the IRS, Jack now helps individuals and small businesses minimize their taxes.

Contact Oxford Club Pillar One Advisor Campbell Jones Cohen CPAs and let that group handle these issues.

The experts there can eliminate probate fees and estate taxes at death without the need to buy life insurance or annuities and protect assets from divorce and litigation without the use of a family limited partnership.

The main reason for contacting Jack is the enormous success he’s had reducing clients taxes with tax-saving strategies that can be used year after year. Campbell Jones Cohen prides itself on personalized and straightforward tax service and solutions.

Jack Cohen, CPA
Campbell Jones Cohen CPAs
Phone: 702.369.2504
Email: jack@yournevadacpa.com
Web: yournevadacpa.com

Program No. 10: Get Rich on Uncle Sam’s Tax-Free Offer

This simple investment is set to throw off the equivalent of nearly 8% EVERY year for the next 20 years.

And no wonder, because there’s a unique advantage behind it: a completely legal “monopoly” no regular business could ever develop. The best part is you can cash out anytime you’d like in a matter of minutes.

We’re talking about municipal bonds.

Billions of dollars’ worth of municipal bonds are sold annually. The major benefit of these bonds is that they throw off tax-exempt interest every year. The interest from these bonds is tax-free at the federal level. In addition, if you reside in the same state or municipality as the issuer, the bond is tax-free at the state and local level.

This is a way that you can benefit from the government’s power monopoly – buy its debt.

In general, there are two kinds of bonds that you should look to buy: utility revenue (not natural gas) and general obligation bonds. Both of these put the power of the government into your investments. A utility revenue bond is secured by the revenues of the utility – say, waterworks or sewers.

In most cities, because of the U.S. Department of Natural Resources, you MUST hook into a sewer system. Most cities also make hooking into their waterworks systems a requirement for living within their limits.

In other words, these utilities ARE monopolies. If anybody but the government owned them, they would likely be deemed illegal.

When they need to make improvements to these facilities, they borrow money by issuing a municipal bond, or muni.

Recently, some of the bonds we’ve seen have rates of about 4%. This doesn’t sound like much until you realize that you pay no tax on this income. You’d have to get nearly 8% in a taxable return to match this if you’re in the highest tax bracket. You can also find bonds issued by the state or municipality you reside in.

In other words, this simple investment throws off the equivalent of nearly 8% EVERY year for the next 20 to 30 years.

If interest rates rise, so will the return you can get on municipal bonds… increasing your taxable equivalent return even more.

And what if you’re uncomfortable buying individual muni bonds? Then look to one of the many mutual funds offering municipal bond funds. Vanguard, Fidelity and T. Rowe Price all have top-ranked funds.

Program No. 11: Don’t Include This Distribution in Your Income

A qualified charitable distribution (QCD) allows some individuals to take advantage of their IRAs to support charities of their choosing.

With a QCD, you can make up to $100,000 in cash donations to IRS-approved charities directly out of your IRAs if you are currently 70 1/2 or older. Your spouse is entitled to a separate $100,000 limitation for any IRAs that they separately own, assuming your spouse has also reached the age of 70 1/2.

QCDs are tax-free, and no deductions are allowed for them. So QCDs don’t directly affect your tax bill. However, they count as withdrawals for purposes of meeting the required minimum distribution rules that apply to your traditional IRAs after age 70 1/2.

Program No. 12: A Simple Change Anyone Can Make to Add More Than $5,000 to Their Social Security Payouts

The average person right now receives about $21,384 in annual Social Security benefits. That’s about $1,782 per month.

The change we’re suggesting represents a 20% increase – the equivalent of an extra $356 every month – for doing nothing more than informing the Social Security Administration that you want to make it.

It’s not life changing. But as far as free money goes, I think an extra $4,272 a year is pretty good. Particularly when the method for getting it doesn’t require much effort.

Let’s start with the basics. Delaying benefits until age 70 allows your benefits to reach their highest level. Collecting benefits as early as age 62 will reduce benefits by the biggest percentage.

Here’s a simple example: Say you are due a $1,000 retirement benefit at your full retirement age of 66. It will rise 32% to $1,320 a month (in real, inflation-adjusted terms) if you wait to claim until you turn 70. It will be reduced 25% to $750 a month if you claim early at age 62.

The higher your salary going into retirement, the more substantial these differences will be. Before you jump at the chance to start receiving money as soon as possible… do the math. See what waiting a few years will do to your payments.

Here’s a quick rundown of some other rebates you can take advantage of…

Program No. 13: A Trip to Bermuda

We love this one. The IRS considers a business convention as an “ordinary and necessary” part of being in the working world, and you can take it as a deduction… as long as it is in the U.S. or a U.S. possession.

That means ANY business convention held in Bermuda can be written off without even showing there was a special reason to hold your business meeting in paradise. And Bermuda’s not the only place. Barbados, Costa Rica, Dominica, the Dominican Republic, Grenada, Guyana, Honduras, Jamaica, St. Lucia, Trinidad and Tobago, Canada, Mexico, and all U.S. possessions also receive this special tax treatment.

Program No. 14: A Beautiful Swimming Pool

This one’s a great example of lateral thinking… and there’s no harm in trying for a deduction. The worst that can happen is the IRS says no, but if it allows it, you just might save yourself a boatload of money. Like this gentleman did…

After being told by his doctor that he needed to exercise (after developing emphysema), this smart fellow put in a swimming pool. The deduction was put down as a necessary MEDICAL EXPENSE and was allowed, along with deductions for various chemicals, heating, cleaning and general upkeep of the pool. Now that’s using your head.

Program No. 15: College Tuition Credit

To get this credit, eligible expenses include tuition, mandatory enrollment fees and course materials, including books and supplies. Anyone who pays qualified education expenses for higher education for themselves, a spouse or a dependent can claim the credit.

Depending on your income, the maximum write-off is $2,500 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers).

Program No. 16: Tax-Free Treatment for Forgiven Principal Residence Mortgage Debt Extended Through 2025

Qualified principal residence indebtedness is any mortgage that you took out to buy, build or substantially improve your principal residence. Prior to the extension, if you had that debt canceled and are no longer obligated to repay the debt, you still had to (in most cases) include the amount of canceled debt in your income.

Now, thanks to the extension, if it was a discharge of qualified principal residence indebtedness, you most likely will be able to exclude all or part of this amount from being included in your income.

On December 20, 2019, the Further Consolidated Appropriations Act was signed into law and extended this program through December 31, 2025.

The act now covers debt forgiven within the calendar years of 2007 through 2025.

Program No. 17: $500 Energy-Efficient Home Improvement Credit Extended Through 2024

Taxpayers who upgrade their homes to improve energy efficiency or make use of renewable energy are still eligible for tax credits to offset some of the costs.

If you made energy-saving improvements to your home by installing an Earth-friendly energy source, you may be able to take advantage of the residential energy efficient property credit. The credit could be worth up to 30% of the total cost of installing certain renewable energy sources in your home if it was installed before 2032. It drops to 22% for 2033 and 2034. It could be worth filing an amended return if you have a qualifying expense.

Program No. 18: Get an Additional $762 Back From Social Security

Do you work for two or more employers? If so, make sure you don’t miss out on an easily overlooked tax credit.

Check to see the total amount of the Social Security taxes all your employers withheld from your pay. The tax is also known as FICA, or the Federal Insurance Contributions Act.

In 2023, the maximum amount of earnings on which the Social Security tax will be collected is $160,200 (up from $147,000 in 2022).

Therefore, the maximum amount withheld from an employee should be $9,932, or 6.2% of the maximum taxable earnings, according to the IRS’ Publication 17.

If the amount withheld by your employers totals more than that, you can claim a tax credit for the excess.

Here is an example from the IRS: Suppose you earned $80,000 from one employer in 2019. That employer withheld $4,960 in Social Security tax, or 6.2% of your wages. But you also worked for another employer and earned $70,000 in wages. That second employer withheld $4,340 in Social Security tax. The total amount withheld for Social Security tax during 2020 would be $9,300.

Subtract $8,537.40 (the maximum that should have been withheld) from $9,300 (the amount actually withheld). The difference is $762.60. That’s your tax credit.

Program No. 19: How to Add Thousands to Your Retirement Account Total

What we’re talking about here is reducing the cost of your 401(k) account.

Retirement plan providers have been overcharging investors for decades – creating a huge drag on returns. The simple fact is that many 401(k) plans are much too expensive…

The average investor’s annual charge is between 0.5% and 1% of assets. In small plans, it’s often much more – as high as 2.5%. In large plans, it’s a little less, but generally speaking, anything above 1% is a rip-off. And charges of more than 2.5% are rare.

Then there can be additional wrap fees of 1% to 3% of your assets. And that’s to say nothing about the mutual funds inside 401(k)s. The average expense ratio of mutual funds in 401(k) plans has been on a downward trend. It was 0.77% in 2000, 0.42% in 2018 and 0.39% in 2019.

Consider this jarring figure from think tank Demos: An ordinary American household with two working adults in 2012 would cough up almost $155,000 in 401(k) fees over a lifetime.

It will only get worse over time. Millennial investors could be looking at losing as much as $590,000 in sacrificed returns over 40 years of saving.

Sure, that’s the worst-case scenario, but all it took was 1% in fees. The low-ball projections have younger investors losing more than $230,000 in fees.

Worse still is that a stunning 70% of those polled in a recent AARP survey said they didn’t think they were being charged anything! You can bet investors in all age groups are likely just as unaware of how much money they’re losing.

Fortunately, thanks to a rule issued by the Labor Department, investors now receive reports detailing all the fees their plan providers are charging.

It was a landmark moment that should go a long way toward maximizing regular savers’ nest eggs.

Be sure to check what you’re paying in fees. If your fees aren’t reasonable, make changes to your personal plan and/or put pressure on your employer to offer additional investment options that charge less.

Program No. 20: Get Deductions for Home Improvements and Repairs

As a homeowner (and in some cases even as a renter!), you can deduct several expenses related to your house.

According to the IRS, home improvements are jobs like plumbing, wiring, installing air conditioning or putting on a new roof that add value and prolong a house’s life.

You can’t necessarily always deduct these costs, but you can add the price of materials and labor to the basis of your home. In certain circumstances, this will reduce the tax owed on the sale of your home in the future, if you decide to sell it. In addition, there are some home products, particularly appliances that are Energy-Star rated, that will qualify for a deduction.

Program No. 21: Internet Tax Deduction and Other Business Expenses

For many people, cellphones, laptops, iPads and the internet are now required equipment for running a business. The IRS realizes that technology is changing and that the use of certain equipment is essential to running a business. Therefore, it allows for the cost of some items to be deducted. This means the high-tech gadgets that help you streamline your work can pay for themselves come tax time.

You can depreciate them, spreading the deduction over the number of years the IRS considers to be the shelf life for this item, or you can write the entire cost off for the year of purchase.

The IRS’ standard for a legitimate deduction requires the item to be a usual, necessary, customary and reasonable expense for your type of work. Also, with most tech gadgets, you can claim a percentage of time that you used that device for business purposes.

Just remember, the bottom line with the IRS is that any item or expense you write off has to make sense with your business. And as usual, if you plan to take a tech deduction, be sure you keep good records of how, when and why you used it.

Program No. 22: Dues, Subscriptions and Mailings

You can deduct membership fees for trade organizations, professional groups and chambers of commerce. Also eligible are write-offs for the entrance fees for trade shows, conferences and other industry meetings, as well as travel costs and meal expenses, which may be deductible under the rules for business travel.

However, dues that are for political lobbying are not deductible, and dues for political clubs or recreational groups aren’t business expenses and can’t be deducted.

On the positive side, if you buy or rent lists of email addresses, mailing addresses or phone numbers, you can write off the cost. Stamps, other mailing costs and the cost of renting post office boxes are deductible. If you pay for customers’ shipping and handling on the goods you sell, you can deduct those costs. Even greeting cards to clients and prospects count as tax-deductible expenses.

And any business journals, trade publications and subscriptions that are directly related to your business are deductible.

Program No. 23: Business Equipment

If you are a small-business owner, this one could be very significant. The Tax Cuts and Jobs Act made permanent and expanded the Section 179 deduction limit to $1.08 million for 2023.

The cost of qualifying business equipment – including software – that you buy, finance or lease to operate your business can be depreciated over three years or deducted immediately under the Section 179 expensing, which lets you write off up to $1.08 million in capital expenditures.

Once again, this is not to be considered legal or tax advice. You should consult your CPA or attorney about your eligibility for these programs.

If you want more information about the Tax Cuts and Jobs Act and additional deductions that may be available to you, please contact Jack Cohen, CPA. I mentioned him back in Program No. 9.