FORGOT YOUR DETAILS?

12 Commonly Overlooked Tax Deductions

by / / Articles

No one ever wants to pay more in taxes than they absolutely have to. But most consumers also don’t really want to invest much time in preparing their taxes or planning for the coming years taxes. It is often a task that is put off until the last minute and then hurriedly thrown together on the final weekend before tax day. But there are many tips and categories that you might be unaware of that can help to maximize tax deductions for this year and every year.

 maximize tax deductions

Are You Charitable?

Most taxpayers are aware that cash donations to a charity are tax deductible. And it can be hard to remember to save the receipt but most people can manage to write off a few moments of good hearted giving each year. But what you might be missing out on are the other gifts that you donate to a recognized charity. If you have donated clothing or household goods to your church, the United Way or a veteran’s charity, then you can deduct the value of those items. You can also deduct the value of an old vehicle if you have donated it to a charity instead of paying the cost of a tow truck to drag it away. And don’t forget to calculate the value of any mileage that you may have driven in conjunction with your work for a charity. If you volunteer with a local hospital to drive seniors to doctor’s’ appointments or if you deliver food for a local food bank, then you can go to the IRS website and see the mileage allotment per mile for your charity work. Did your charitable heart lead to you providing care for someone else? If you were caring for a parent, child or foster child then you could be eligible for a tax credit. Also the money that you pay to someone else to help you provide care while you work is deductible as dependent care cost.

Have You Moved for Work?

If you have relocated for work then you can write your moving expenses off on your taxes. And the best part is that you don’t even need to itemize deductions to take advantage of this deduction as it is an above the line deduction on the 1040 form. Along those same lines, did you know that you can deduct expenses you incurred for job hunting? This deduction can include resume preparation fees, job service fees, job agency fees and the cost of mailing out copies of your resume. This could also include the cost of travel to interview for the new job which resulted in your relocation.

A Second Home

One of the greatest benefits of homeownership is the tax deduction on your mortgage. But did you know that interest on your boat or RV might also be tax deductible? As long as it has places to sleep, cook and a toilet facility then the IRS considers it a home. You are not required to live in your second home a specific number of days per year, it simply must meet the criteria of a home to make the interest tax deductible as your second home. And while you are considering all of the tax benefits for your home or homes, don’t forget to deduct the property tax that you pay on any and all properties that you own. Unlike the interest on a mortgage, the property tax deduction is not limited to only two properties.

Benefits for the Different Phases of Your Life

Education is important for you and your children. Make sure that you explore all of the options that available as credits and tax deductions for higher education such as the American Opportunity Tax Credit and the Lifetime Learning Credit. Another important time in your life is retirement. Most people know that IRA contributions have a tax benefit but the less commonly known deduction is the Retirement Savers’ Credit. This credit could cut another $1,000 off of your tax bill. And while you are still working and paying income tax you will want to determine if there are some years when it is bigger savings for you to claim your state and local tax that you paid last year or your sales tax that you paid last year. If you made a large purchase such as a vehicle or recreational vehicle, then it might be wise to take the sales tax for that year.

Unique Types of Income

Everyone who enjoys gambling hopes that one day they will win big and retire a millionaire. But normally the winnings are small and even that small income is taxable. So you can offset your occasional wins with your more regular losses. Claiming both the winnings as income and the losses might make it a break even and eliminate any additional taxes being owed. If you have another hobby that you enjoy and it also brings in a little extra cash, that money is also taxable. So selling crafts at a bazaar is not tax-free earnings. But much like with the gambling winnings vs. losses, tracking the money you spend on hobby and craft materials can eliminate the earnings that you might have made.Healthy Savings

Healthy SavingsWith health care costs skyrocketing, many consumers have selected high deductible plans to try to save on their premium costs. And a great way to save up in case you need to pay a deductible is

With health care costs skyrocketing, many consumers have selected high deductible plans to try to save on their premium costs. And a great way to save up in case you need to pay a deductible is a Health Savings Account. If you have opened an HSA outside of one offered by your employer, then you are contributing post-tax money. You are eligible to complete a Form 8889 and claim an above the line deduction for those after-tax dollars used to fund your HSA.

Don’t Miss Out

In the case of many of these deductions, you will directly reduce your tax liability and a few others will allow you to be credited back some of the money you might already have paid to the government. But the final result is the same, investing just a little bit of time and planning can save you money on your taxes this year and every year. Don’t miss out just because you decided to wait until April 14th to start preparing your taxes.

Leave a Reply

Your email address will not be published. Required fields are marked *

TOP