We have a lot of our clients transitioning their personal residences into rental units because the market conditions have been so unfavorable. Turning a home into a rental unit can help cover the carrying costs and at the same time produce a good tax deduction. Up to $25,000 worth of rental losses may be deductible each year which can make a big difference on your tax return. Real estate taxes and mortgage interest are a couple examples of deductible expenses. In addition you are also able to write off the cost of insurance, utilities, repairs and even mileage. All these expenses reduce the rental income you are receiving from your tenant. As always, it is important to contact one of our tax professionals with any questions you might have.

If you make a retirement plan contribution you could qualify for a credit of up to $2,000. The credit ranges from 10% all the way up to 50% of what you contribute into your retirement plan. If your income is less than approximately $56,000 for a married couple or $28,000 for a single person this credit might work for you. Even though we are now in 2012 you are still allowed to create and contribute to certain retirement plans. This is one of those few cases where you can talk it through with your tax professional and make a decision that will impact your 2011 tax return during 2012. Now, there are rules to keep in mind so remember to contact one of our tax specialists to find out if you qualify.

Many tax deductions and credits in Michigan have been eliminate or reduced as of January 1st 2012. The tax credits for donations and tuition have been eliminated while the Michigan Homestead Property Tax Credit has been significantly reduced. Also, the additional standard deduction for seniors and children has been eliminated. If you count on any of these credits or deductions to help cover your tax bill make sure you factor that in when tax planning for 2012. You might need to increase your state withholding or consider estimated tax payments through the year. As always, it is important to contact a tax professional to find out how these changes might impact you.

Thanks to the Homestead Property Tax Credit, Michigan might have some extra money coming your way. Don't let the name fool you because rent payments as well as property taxes do qualify. The credit is calculated by comparing your income to the property taxes or the rent you paid in 2011. The credit tops out at $1,200. Even if you don't normally file a Michigan tax return, this might give you an incentive to do so this year. If you are 65 years or older the credit is calculated at a different level. Of course there are certain restrictions, so make sure to contact one of our tax specialists to find out if you qualify.

The IRS allows a miscellaneous itemized deduction for expenses incurred while searching for a new job in your current line of work. Fees paid to recruiters, costs of producing your resume, as well as any advertising you might have done are all examples of expenses that qualify. In addition, local and out of town travel expenses are deductible while traveling for interviews. Your expenses are deductible whether or not you found employment. You do have to itemize in order to claim these expenses and there are certain income limitations that apply so make sure to contact one of our tax professionals to find out if this deduction will work for you.

Beginning January 2012 the taxation of retirement income changed and it all has to do with when you were born. If you were born before 1946 the rules for you stay the same. If you were born after 1946 but before 1953 the maximum retirement income you can deduct is $40,000 for a married couple and $20,000 for singles. In addition to this deduction you don't have to pay tax on any of your social security income. All of the new laws are based on the oldest spouse in the relationship. So the age of whoever was born first will determine which rules apply to you. Make sure to contact one of our tax professionals with any questions you have.