Once Upon A Time…

…I was an accountant.

Yes, as many of you know, though I am a teacher, I didn’t follow the most traditional path to get here. See, I started out as an accounting major at Villanova University. I was a student at a business school which is consistently ranked in the top 20 by BusinessWeek magazine. I followed the typical path of a Villanova accounting student…I worked hard, I earned an internship with one of the “Big 4” for the summer after my junior year, and before I even sat down in my first class as a senior, I already had a contract in hand for a lucrative, full-time position in the audit department at that same firm. However, after a long, drawn-out year of life chats, debate, discussions, deliberations, prayers, and discernment, I made a decision that to this day still makes some people shake their heads: for the first time, I ignored the outcome of my weighted-average pro/con Excel spreadsheet (yes I had a template for that…you can laugh) and decided to follow my heart instead. I walked away from a “dream” job, a hefty paycheck, and a comfortable start to post-collegiate life in downtown Philadelphia…and I became an elementary school teacher instead. And not just any elementary school, but one of the most amazing, challenging, and life-altering schools in the heart of our nation’s capital. 6 years have passed and I am still a teacher…though now outside Baltimore, with no CPA but an M.Ed. under my belt, and I can honestly say that I have not once looked back with regret or second thoughts about my decision. While the financial cushion would certainly be a welcome gift, I wouldn’t trade the lessons, experiences, and blessings of the past 6 years for all the money, corporate meals, and frequent flyer miles in the world.

Spring 2008: My last “official” business function…with the University President of course 🙂

That being said, I can also say without hesitation that I do not have an ounce of regret about my course of study during my college years either. People often ask if I wish I could go back and not spend four years filling my brain with knowledge of balance sheets, cashflow, GAAP, PP&E, COSO, SOX, and countless other acronyms which are now gathering dust in a back corner of my brain. My answer to that is a resounding no. Partially because I firmly believe that every single life experience: good, bad, or indifferent, makes you the person you are…but also because those 4 years taught me so much useful, practical information. I have a profound understanding of what it takes to run a small business, a large corporation, a Catholic parish (that’s right, my course of study culminated in a 90-page thesis project exploring the internal controls and financial structure of the Catholic church, with an emphasis on the parish level); but most of all, it’s because once a year I have to return to that accountant-self…and I’m so grateful I sat through all those classes.

The culmination of my unique course of study…

We love income tax finals!!

That’s right…it’s tax season.

It’s that time of year where I get to brush off my Judy’s 10-key, dust off the cobwebs which have gathered in that back corner of my brain, and file my taxes. In my first 2 years out of college, I was the personal accountant to my fellow ACE roommates…and even my first year in Baltimore I had a few “clients” who paid me in Starbucks gift cards to file their returns. Then my health issues set in and derailed my plans to also have my own “I’m not a CPA so I’ll charge you less to file simple tax returns” side business; however, as with so many other things: my health issues opened up a whole new world for me: this time it was tax deductions. So, my fellow food-allergy friends (or any kind of health ailment really), here are some little-known tips that can save you a pretty penny. It’s probably a little late for your 2013 returns since you didn’t know to save all your receipts…but 2014 is a new tax year and we’re only 24 days in…start stockpiling those receipts now 🙂

Health-related tax deductions:

• Gluten-free food deduction: Yep, you read that correctly. After a year of reaching deep into those pockets, shelling out $5 to $6 for a loaf of bread while your wheat-flour consuming friends were piling the $1 loaves of Wonder bread into their carts, you finally catch a break. Admittedly, it’s a small one…but at this point, I’ll take whatever I can get. Now, before you get too excited, you can’t deduct the total amount of your loaf BUT you can deduct the DIFFERENCE between what you paid for gluten-free bread compared to the cost of the regular counterpart.

• Pros: 
• It works for all gluten-free foods that have a “regular” (i.e.gluten-filled) counterpart. For example, gluten-free pizza vs. regular pizza. It also works for any gluten-free item that is deemed essential but has no counterpart. The most common example is xanthan gum. You’ll never, and I mean never, have to use that in regular baking but it’s a key ingredient in any gluten-free baked good SO the full amount of your xanthan gum purchase is tax-deductible. Of course, 1 $12 jar of that will probably last you a good 2 or 3 years so it’s not a deduction that shows up often (unless you bake as much as I do).
• This deduction also includes mileage ($0.24 each!) for the extra distance you have to travel to your “special” grocery store to get those items you just can’t find at the local Safeway or Giant.
• Last but not least, you can also deduct shipping/postage costs for any and all gluten-free items you ordered and had shipped to your home.

• Challenges: 
• You must have an official doctor’s document confirming your diagnosis of celiac disease. I know, I know. Gluten-intolerant friends, begin the rant now. This stipulation was put in place to prevent people on the “I’m going gluten-free because it’s in and trendy” plan from taking advantage of this deduction…but in the process of doing so, they’re hurting an awful lot of people in that gray “I can’t officially diagnose you with celiac because…” area. Talk to your doctor…I don’t know what else to say. Except maybe, “Dear IRS, please hire Katie”.

• Paperwork. I hear you loud and clear, “Katie, I’m lucky I don’t lose my chapstick by the end of a week, you think I can keep track of receipts for a whole year!”. Trust me, I know. And honestly for some people, this deduction is more work than they’re willing to put forth and that’s OK. I just believe in informed decisionmaking (I mean, need I remind you: weighted-average pro/con spreadsheet??) so here is your information. Decide what works for you. And just to give you a little boost, here is an Excel Spreadsheet you can use. Yes, it’s for Canada…but it’s provided by TurboTax and it’s the one I use…same columns necessary in the US..just easier in Excel than a PDF. Now all you need is a box to throw all your receipts in (just in case the dreaded auditors call 🙂 and you’re set! 

• Medical Expenses: Ah yes, just one look at my tax returns from each year and you can pinpoint which years were health struggles for me. There’s no nice way to say it: being sick is EXPENSIVE. Well, I guess really it’s being healthy that’s expensive…but you get the point. I am blessed to have decent medical insurance so I’m luckier than so many; however, even with that, the out-of-pocket expenses for co-pays, prescriptions, labwork, ER visits, etc. were enough to make my jaw hit the floor. I punched everything into my calculator 3 times to be certain…and then took on 2 part-time jobs. The good news (if one can call it good to be ill) is that all of these out-of-pocket expenses are deductible. Well, sort of.

• Be careful!!:  You can only deduct these medical expenses IF they exceed 10% of your AGI (Adjusted Gross Income) for the year. It was just increased to 10% this year from 7.5% so even if you already knew about it, make sure you still qualify this year. It’s one of those odd moments where your expenses surpass a certain threshold and you find yourself holding your breath, waiting to see if they’ll add up to just a little more so you qualify. The cruel irony of the IRS…

• Don’t forget!!: This includes ALL medical, prescription, and dental expenses. (Yes, late-diagnosed celiacs, I’m talking to you. I know all those years of misdiagnosis eroded your enamel and those poor pearly whites have been paying the price…but hopefully now your bank account won’t have to!) This also includes PARKING at all doctor and hospital visits. I always want to say “Why even put the 0-30 minutes FREE category on the sign? What doctor is going to get me in and out and back out of the garage in under 30 minutes? Just take my $3”. Of course, this does mean you need to save all of those little stubs. Every single one. Same goes for tolls to get to your various treatments and appointments. And there’s a standard mileage deduction as well if you have to travel for your care. Again, lots of paperwork…but definitely worth it for some people!

• So I leave this on a good note: This also includes medical conferences!! For example, you attend a fantastic food allergy conference to learn more about your new life, taste delicious “you-safe” samples, feel like a “normal” person again for a few hours…AND it’s tax-deductible!! Just the cost of your entry and your transportation to get there. Not your lodging or food while you’re there…but really, let’s not get greedy. I’ll take admission and transportation any day  🙂

• State Income Taxes Paid OR State Sales Tax Paid: This one always shocks people…but think about it. Those lucky Delawareans don’t pay sales tax all year and those of you in Arizona and Louisiana are coughing up nearly 9% at the register. Floridians don’t lose a cent of their income to the state government while those of you soaking in the California sun are losing 13% of your income in each check. A lot of things in life aren’t fair…but even that is a bit of a stretch as far as the federal government is concerned. So if you itemize your deductions, you can deduct the higher of the two: either the state income taxes you paid this year or the total sales tax you paid to the state. Of course that one requires, you guessed it, every single receipt from the year. So most likely that one will only prove worthwhile if you made some major purchases this year…but then again, you never know. Some people really love to shop 🙂

• Job-Searching Deductions: Searching for a new job is never an easy thing to do…and in this day and age, it seems like people are going through jobs like I go through aluminum foil: absurdly fast. Any career counseling, costs of resume printing and mailing, travel expenses to interviews, etc. are all deductible. Of course, as with everything else, there are stipulations. This does NOT apply to the search for your FIRST job, only subsequent job changes. Also, this job switch must be within the same field…so no deductions for a teacher turned baker in my future 😦 Finally, your costs must exceed 2% of your AGI to be deemed deductible. The great news: this deduction applies whether you were successful in finding employment or not! The bad news: 2% of your AGI is probably a big number to be spending on job searching…

So if you’re trading in your corner office for this corner “office”, no tax deduction for you: SAME FIELD ONLY!

• Education/Student Loan Deductions: There are a variety of education credits and deductions. Most people know about the deduction for student loan interest but many people forget that there is a Lifetime Learning credit for any post-collegiate education (i.e. grad school classes) REGARDLESS of whether it’s a degree program or not. (So that free-lance poetry class you signed up for last year: qualifies! Even if you have no plans to earn a Masters in Creative Writing.) There are several stipulations of course…but too many to explain. Just go here.

You  know what they say: “Once a Villanova accountant, always a Villanova accountant.”  I mean I do still have the hat. And the mug 🙂