Michelle Seeber
Woodward News
Woodward, Okla. — If you are among the many Americans who feel like you're working just to pay the government, you may be surprised to learn that the federal government is offering a tax credit for 2009 and 2010 just for those who are gainfully employed.
This quirky tax credit is called “Making Work Pay.”
“Making Work Pay” is a credit that married couples or those who are single can get if they work, according to David Stell, IRS spokesman for Oklahoma and Arkansas.
Under “Making Work Pay” the amount of the credit would be subtracted from the taxes to be paid -- $400 for a single person and $800 for a couple if both work, Stell said, noting, “It’s a dollar for dollar reduction.”
“The tax credit came about last February with the American Recovery and Reinvestment Act brought into law by President Obama,” Stell said.
According to Woodward accountant Gene Dixon you have to file earned income with a Schedule 7 form that you send with your return in order to receive the credit.
In addition to getting credit for working, the federal government also offers a variety of deductions to help lower your tax burden.
Many of these deductions address several ordinary and not so ordinary medical expenses from having a baby to going through drug rehabilitation to even taking dyslexia language training.
For example, according to Karin DeVon of Kent West CPA in Mooreland, citizens can receive tax deductions for individual pregnancy test kits, legal sterilization procedures, drug addiction treatment and childbirth preparation classes.
Some more common ones include deductions for wheelchairs and hearing aids, she said. Less known ones include prescribed therapeutic swimming costs and weight loss programs, DeVon said.
“A vasectomy or reverse vasectomy are also (on the list),” she said, noting, laser eye surgery and “even lead paint removal is deductible if a child has gotten lead poisoning.”
And “there is a deduction for acupuncture,” she said.
A key to getting deductions for these items involves being able to provide proof for them, which means saving receipts and getting doctor prescriptions, Stell said.
“If a doctor prescribes something for the treatment or mitigation for a disease or health treatment, it’s generally deductible,” Stell said.
But the deduction is to make up for “out of pocket expenses,” he said.
“If insurance pays, you’re not eligible,” he said. “You can’t just put $15 for that pregnancy kit (on your tax return). It’s not just automatically deductible from your taxable income.”
“Medical expenses are subjected to a floor of seven-and-a-half percent of your adjusted gross income,” Stell said, noting “only the dollar amount that’s greater than seven-and-a-half percent of your adjusted gross income is eligible.”
For example, “if your AGI (adjusted gross income) is $50,000, you have to have $3,750 in out of pocket expenses, before you can claim a deduction," he said. “If they (medical expenses) come to $3,800, then your itemized deduction is $50. So whatever is over that amount, you get a medical deduction.”
Of course, “it depends on whether or not you’re getting reimbursed for all this, and it depends on your adjusted gross income too,” he said.
The list can go on to include tuition for YMCA day care for children with disabilities to smoking cessation programs and prescribed items for nicotine withdrawal, DeVon said.
“But you have to itemize before (you) can take out the expenses,” she said, noting, "any certified accountant can do this or (you) can go to the IRS website (irs.gov) for medical deductions.”
There are also deductions available to students.
The “American Opportunity and Hope” credit is for college students who have to pay for tuition and books out of their own pockets, according to Sue West of H&R Block in Woodward.
For more information about tax credits and deductions, visit the IRS website or a certified tax preparer or accountant.
