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MoneyTips

Pets bring a lot of joy and happiness to family homes, something which many Americans have needed more than ever over the last year. So it may come as no surprise that pet adoptions soared during the pandemic. According to PetPoint, a site that collects data on shelter animals, the rate at which companion animals were rescued from shelters in 2020 increased by 12 percent.

Though there are many physical and mental benefits of bringing a new pet into your home, there are also many costs that come with taking care of a dog or cat. Beyond food and toys, vet care can be a challenge for those who are unprepared. Last year, total spending on vet care reached $31.4 billion as reported by the The Costs of Pet Care

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MoneyTips

Congratulations! You have saved for your child's education using a state 529 plan and built up a decent nest egg to send him or her off to school or college with minimal financial worries. Once a choice of school is made, you can apply the 529 funds toward the educational costs — but beware of these mistakes that parents make when first withdrawing from 529 plans.

Assuming the Process is Automatic – People are so used to the automated aspects of financial services that they expect 529 accounts to work in the same way. In the case of a 529 plan, you must request that the funds be withdrawn and direct them accordingly. Check with your 529 plan to verify the options. Typically, you can direct the funds to the school, beneficiary (student), or to the owner (parents). In all cases, you must initiate the withdrawal.

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MoneyTips

Caring for an elderly relative can be rewarding, but incredibly difficult – as well as expensive. However, it may be possible to recoup some of the costs through income tax savings.

There are two general approaches to tax savings on elder care costs – taking medical deductions that can be itemized and claiming a dependent care credit that can be subtracted directly from the taxes you owe.

First, you must determine if your elderly relative qualifies as a dependent. Full details are listed in IRS Publication 501, "Dependents, Standard Deduction, and Filing Information," but the primary criteria are that they must be a relative, you must be providing over half of their support, and their gross 2020 income must be less than $4,300.

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MoneyTips

When you use your car for both personal and business reasons and you are not fully reimbursed through your employer for the business expenses, you can deduct those costs from your taxes. How do you go about claiming these deductions? Assuming that you itemize, you have two general paths:

  • Standard Mileage Method – The IRS prints flat rates of reimbursement per mile driven for each calendar year. For business use of your vehicle in tax year 2020, the standard mileage rate is 57.5 cents per mile, down from the 2019 value of 58 cents per mile.
  • Actual Expense Method – Rather than calculate an average based on miles, you can calculate the actual expenses related to the non-personal use including gas, oil, maintenance costs, depreciation, tolls, parking fees, insurance, and other applicable exp...

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MoneyTips

In general, deducting pet expenses on your tax return can get you into hot water with the Internal Revenue Service (IRS). Usually pet expenses will not hold up should the IRS audit you. However, specific cases exist that allow you to take legitimate tax deductions for spending on your pet.

Regardless of how you justify your pet deductions, make sure that you have receipts and documentation for all expenses you claim on your tax return or they will be disallowed.

Guard Pets

Guard animals could pass muster for a deduction for your business. If you consider deducting your pet as a guard animal, make sure that they actually perform guard duties. Your pet's breed should be one that is often considered that of a typical guard animal. For instance, a pit bull could be considered a guard dog while a Chihuahua probably would not.

It would be beneficial if you could pr...

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