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Taxation

Individual Tax Return Tips #4 – Get your work to pay for your expenses

 

Claiming a tax deduction helps you get back a tax refund based on your marginal tax rate that your income is taxed at.  So this could be a maximum of 47 cents in the dollar, or could be 39 cents, or 34.5 cents, of 21 cents or 0 cents in the dollar.  So for a $100 tax deduction, the maximum refund is  $47 (and that’s if you pay the highest marginal rate when your income is over $180,000), or could be $39, or $34.5, or $21.  So you are still out of pocket the balance of this up to the $100 cost.

So as you never get back 100% of what the expense cost you, the best option is to convince your work to reimburse you the cost of the expense.  It will mean you get a reduced tax refund when you see us (as you can’t claim it if you have been reimbursed from work the costs), but will mean that you get back 100% cash back of the costs from work, compared to a lot less of a tax refund as noted above.

By Pat Hoey