The American debt crisis has gotten way out of hand. According to government data cited in a recent LA Times article, US consumer debt has reached 12.58 trillion, topping the amount of debt in 2008 which led to the recession. Data indicates that borrowers are more responsible in repaying their debts now, but the amount of debt is still very alarming.
Legislators are now aiming to pass legislation that would make business have to pay taxes on debts that they take out.
New Tax Modification Explained
The new modification is the elimination of the ability for businesses to write off debt interest as a tax deduction. Republican lawmakers propose that this new tax revision will generate about 1.5 trillion in government revenue over a decade. Private equity companies and wall street companies who have debt-oriented business models would be most affected. This change is designed to limit the amount of business done involving junk bonds and jet-fueled leverage buyouts, both of which carry a lot of financial risk, which has led to many of the financial problems we face today. This new modification will affect many business owners who need to take out credit to finance operations, from farmers to wall street giants. Keep reading, for some current tax deductions people commonly forget to make.
Common Tax Deductions That Will Help You Save
- Out-of-pocket charitable donations: You can write off expenses you incurred while working for non-profit organizations. For example, if you buy supplies to make a cake for a non-profit homeless soup kitchen, you can write those off as deductions. These expenses are small, but they add up.
- Student loan debt paid by parents: You can deduct up to $2500 per year in student loan interest on student loans if your parents are paying them off.
- Job-Hunting costs: You can write off expenses incurred for searching for jobs if you are unemployed and looking for a job in the same line of work you were previously in. These can only be written off after the expenses exceed 2 percent of your adjusted gross income.
- Travel expenses: Adding baggage fees and other booking fees for air travel as deductibles on your tax return if you are self-employed can help you save.
Washington, D.C. bankruptcy attorney Kevin D. Judd has excellent knowledge of money-saving tips and debt management options. If you are looking to eliminate debt or are seeking financial advice, contact him for a free consultation today.