Believe it or not, as taxpayers, we may overlook some seemingly obvious deductions that could save us more of our hard-earned money! Here are some of those items to keep in mind when tax time is looming.
Remember, if you’re ever unsure about a specific deduction, ask a trusted tax preparer, or visit http://www.irs.gov for more information.
Vehicle Excise Tax If you get a bill from your state or local government charging you a tax for owning a vehicle, you may be able to deduct that tax. You can also get the tax deduction if you lease a vehicle and your finance company bills you for the tax.
Job-Hunting Expenses It pays to save your receipts for job-hunting expenses. These expenses are deductible if they were incurred to locate a new job in the same line of work.
Real Estate Taxes Also, don’t forget taxes you pain indirectly, such as taxes paid through a mortgage escrow account. If you bought a house, check your settlement statement for any taxes which you reimbursed the seller at the closing.
Cost of Tax Preparation Tax software, expenses, preparation fees, and other tax-filing expenses are all deductible on your tax returns as a miscellaneous itemized expense. Be careful to deduct them on the return for the year in which you paid the costs.
Capital Loss Carryover If your capital losses are greater than your capital gains, you won’t have to pay tax on the capital gains. If you have a capital loss one year and a capital gain the next year, use your capital loss carryover to reduce your taxes in the later year.
State Tax You Paid in April with your Return If you owned taxes when yo filed your last state tax return, that check you wrote could help you when it’s time to pay your next year’s taxes.
Reinvested Dividends Often a mutual fund account is set up to automatically reinvest dividends in additional share purchases.
Credit for Excess Social Security Tax If you worked for more than one employer during the year, look into the credit for excess Social Security Tax.
Non-Cash Contributions If you’ve donated clothes, furniture, or other items to a charity, the value of your donated items is deductible. Always get a written receipt. With non-cash charitable contributions, no receipt means no deduction if you are audited.
Old Points on Refinancing A lot of people miss this one. All un-amortized points on an old refinancing are deducted in the year of a new refinancing.
Health Insurance Premiums Any health insurance premiums you pay are potentially deductible. You have to add these to your total medical expenses, however, they have to exceed a certain percent of your AGI or adjusted gross income before they give you any tax benefit.
** If you are self-employed and not covered by any other employer-paid plan, you can deduct 100% of your health insurance premiums.
Investment and Tax Expenses Many of us forget tax planning and investment expenses because they are part of miscellaneous itemized expenses. Expenses to track, including your employee business expenses, are tax preparation fees, and even the portion of your legal or accounting fees relating to tax planning.
Casualty Deductions If the area where you live has been declared a disaster area as the result of a hurricane, flood, wildfire, tornado, etc., you may claim an incentive to save for retirement.
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