Writing on SmartMoney.com, Bill Bischoff points out six tax breaks to help high-income clients limit their tax bill this year.
- Take advantage of SEPs. Over 8 percent of younger boomers are self-employed, while 10.5 percent of older boomers are, according to the Bureau of Labor Statistics. Self-employed boomers may be able to deduct up to $46,000 for 2008.
- If your clients paid too much to Social Security last year, they can claim some of it back. The credit will be for the amount clients contributed beyond $6,324, which represents their half of the 12.4 percent Social Security tax based on a maximum salary of $97,500, Bischoff writes.
- Divorced clients may be able to deduct alimony payments, depending on the terms of the divorce.
- Unlucky clients can deduct gambling losses up to the amount they’ve won during the year.
- Write off investment interest. “The deduction for the interest paid to carry taxable investments (…) is unaffected by the phase-out rules that apply to most other itemized deductions listed on Schedule A,” Bischoff writes. The only catch? The deduction can’t exceed taxable income from interest, annuities, royalties and short-term capital gains.
- Take advantage of the dependent care credit. High-income clients with kids under 13 can take a credit of 20 percent of child care expenses, up to $600 for one child and $1,200 for two or more.