12 Days Of Tax Deductions
Over the next 12 days, Morning Edition will take a closer look at the biggest federal tax deductions: how they came about, who benefits and how they might be affected by "fiscal cliff" negotiations. We begin with the casualty loss deduction.
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DAVID GREENE, HOST:
Ah, 'tis the season for gift giving. And some feel Congress could give us no greater gift than a budget deal that would keep our economy from going off the fiscal cliff.
One idea to raise revenue: reduce the deductions, credits, and other benefits that taxpayers now enjoy.
RENEE MONTAGNE, HOST:
So, in the spirit of this deficit deadline season, we are going to consider them too. It's our 12 Days of Deductions.
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MONTAGNE: Today, we start with the casualty loss deduction. It's an age-old tax break and it's aimed at helping people whose homes or property are damaged by natural disasters, like Hurricane Sandy.
BARBARA WELTMAN: Anything that insurance doesn't cover, including the deductible and other amounts for the property damage or loss is considered a loss that you can deduct.
GREENE: That's Barbara Weltman. She's a contributing editor to J.K. Lasser's "Your Income Tax 2013."
WELTMAN: But you have to pass that 10 percent of adjusted gross income threshold in order to get any benefit and you do have to itemize.
MONTAGNE: Translation: You can't deduct your entire out of pocket loss.
GREENE: But it is important to note that if you are in an area declared a federal disaster zone, you can amend your previous year's return. So claim the deductions for last year, get the refund this year, and that's cash that can help you rebuild.
MONTAGNE: Tomorrow, we look at a tax break aimed at making education more affordable. It's the American Opportunity Tax Credit.
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