10 Tax Deductions You Don’t Want to Overlook
Millions of Americans overpay on their taxes every year.
Although some of these tax deductions are small, missing too many of them can add up to a lot of money. To make sure that you don’t make a costly mistake that could mean missing out on major savings opportunities, check out these 10 frequently overlooked tax deductions.
Out of Pocket Costs for Charity
While most people already know that they can deduct donations of cash or goods, many are unaware that they can also deduct all of their out-of-pocket expenses when they volunteer. This includes everything from transportation – including mileage, parking fees and tolls – to other travel expenses when away from home, such as meals and hotel stays. It is strongly recommended that you have good documentation to back up these expenses and that you never attempt to deduct an expense unrelated to charity.
If you are actively seeking a new job, any expenses incurred during the search can be deducted. You are permitted to deduct money spent to send out resumes, including paper, ink and stamps. You can also deduct any internet expenses – such as posting your resume to different job sites – and any travel expenses sustained to and from interviews. It is important to note that you cannot deduct job hunting expenses for your first job.
Moving Expenses to Take a New Job
You can take this deduction even if you do not itemize. As long as your new job is at least 50 miles farther from your old residence than your previous job location was from your prior residence, you are allowed to deduct mileage and the transportation of your household goods to your new location.
If you buy a new home or refinance your current mortgage and buy points, you can deduct the cost of the points. If you purchased a home, you can deduct the cost all at once. If you refinanced, however, you have to take the deduction over the course of the loan.
Home Improvement Loan Interest
While most people claim interest on their home loan, many overlook interest paid on a home improvement loan. As long as the loan is intended for a major renovation, you will be able to deduct any interest paid.
Tax Preparation Fees
If you paid to have your taxes prepared or purchased software to complete your taxes, these fees are deductible. You can also deduct any fees associated with e-filing your tax return.
State Sales Tax
All taxpayers have the option to deduct state sales tax. Typically it only makes sense if you are living in a state that has no income tax because you have the option to decide between deducting state and local taxes or state and local sales taxes. For the individuals that live in states that have an income tax it is a no brainer to deduct that instead of the sales tax since it is likely a lot larger. This deduction may not save you a lot, but why pay uncle sam more than you need to.
Student Loan Interest Paid By Parent
If you are a parent and are paying back your child’s student loans, you can deduct the interest you paid, up to $2,500.00.
Transportation for Medical Visits
Many people forget to deduct transportation to and from doctor visits. You can deduct mileage if you take your own car, in addition to parking and tolls. If you take a bus or pay cab fare for transportation, those expenses are also deductible.
Jury Pay Turned Over to an Employer
If your employer paid your full salary while you served jury duty and you turned over your jury duty pay to your employer, you still have to report the jury duty money as income; however, you are allowed to deduct the amount that you turned over to your employer.
Tax laws are complex and constantly changing. It is very common for people pay more in taxes than they have to each year. If you feel you missed a large deduction in the past, consider filing an amended tax return. To file an amended tax return you have three years from the due date of the return that was filed. When filing your taxes, it is a good idea to use tax software or go to an experienced tax preparer to help ensure you take advantage of all the deductions that apply to you.
This guest post was provided by BackTaxesHelp.com, a website that helps taxpayers find the best solution to their tax problems. Visit their site and find more information on IRS levies, tax penalties and more.