Tax Time is Coming - Federal Income Tax Breaks Are Available for Certain Occupations

As the end of the year approaches many of you are beginning to think about the upcoming income tax season which begins shortly. For certain occupation Uncle Sam is allowing special tax breaks. Under the Internal Revenue Service (IRS) tax code, certain occupations are treated more favorable than others. A few of these favorite occupations are teachers, professors, caregivers, the clergy, farmers and fishermen, also reservist and members of the National Guard.

Teachers are allowed to take an additional $250 above the line deduction for unreimbursed expenses they incur on purchases of books and school supplies. Principals, teacher's aides, and other educators are also eligible for this deduction. An above the line deduction is a subtraction from the taxpayer's gross income which is taken to arrive at the adjusted gross income amount. To qualify, the educator must work at least 900 hours during the school year.

College and university professors, as well as private school instructors are generally offered reduced or free tuition for their dependent off spring to attend the same institution. This discounted or free tuition can have a value of up to $35,000. This benefit is not taxable as income to neither the parent/faculty member nor the student. Those eligible for this special tax break should review the IRS Tax Benefits for Education publication.

If you are the caregiver of children or an elderly or disabled individual, and you perform this service in your home, you can are entitled to additional tax deductions for business use of your home. IRS publication No. 587, Business Use of Your Home details how to apply this special tax break on your tax return.

Members of the Clergy are exempt from income tax on the value of the housing expense which is provided as a part of their compensation. Housing provided by the church, and allowance to rent a dwelling, or an allowance to cover home ownership cost is all tax free. However, the special tax break allowance can not exceed the fair market rental value of the property, plus utilities. IRS Publication 517 provides more details.

Farmers and Fishermen are allowed to income average over three tax seasons. To be eligible the tax payer must be materially participating in the farming or fishing business. Schedule J is the proper form to attach to your tax return. See the Farmer's Tax Guide, IRS Publication 225 for more information.

Military personnel, which include National Guard members and reservist, are entitled to some travel expense when they must travel at least 100 miles or more away from home and stay overnight. This special tax break is an above the line deduction and is available even if you do not itemize your deductions. Combat pay is also free of federal income tax. An enlisted personnel who receives a signing bonus for reenlisting in the armed services, can elect to do so while they are still in a combat zone making the entire lump sum tax free. The IRS Publication No. 3, Armed Forces Tax Guide offers insight about other similar strategies and tax deductions military personnel can take advantage of.

Other occupations are also entitled to special tax breaks and deductions. To obtain information, regarding which they are, visit the IRS web site at www.irs.gov/ and search for special breaks and tax deductions.

Resource: IRS Publication No. 17, Your Federal Income Tax

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