Legal Tax Loopholes: 10 Creative Yet Legal Tax Deductions
Are you ready to get a little creative with your tax return in the coming year? Are you trying to maximum your deductions and keep more of your own money in your pocket? There are many ways to creatively and legally deduct items on your future tax returns. Take a look at the ten we have outlined for you below:
1. Moving Expenses: If you move more than 50 miles and start a new job, you can deduct some of your moving expenses including packing and shipping costs, storage costs (for up to 30 days), disconnecting and reconnecting utilities and hotel costs. You can even deduct moving costs if you are self-employed and are moving from one “home office” to another.
2. Tax Prep: You can deduct tax preparation fees that exceed 2% of your adjusted gross income.
3. Parent-paid student loans: What? Well, the IRS will give you (the taxpayer) credit and allow you to deduct student loan interest that you (or your parents) pay back. Why would they do that? Well, the IRS thinks that the person who is responsible for the loan should be the one who can deduct the interest associated with the loan. So, if this applies to you and you are not considered a dependent, you can likely deduct up to $2500 in student loan interest each year.
4. Smoking Cessation: You can deduct expenses related to smoking cessation programs and/or nicotine patches.
5. Want to lose weight? Weight loss programs and even bariatric surgery can be deducted as long as your medical expenses do not exceed 7.5% of your adjusted gross income.
6. Unpaid loan: If you have given up all hope of being paid back money that you loaned a friend or family member, you may be able to deduct this to recover a bit of what you’ve lost.
7. Charitable Volunteer Expenses: Many people are aware that they can deduct cash donations, household items or clothing that they donate to a charity. But, you can also donate expenses like mileage and child care while you volunteer and even ticket costs and the cost of ingredients that you purchase for baked goods or other donated food items.
8. Is your hobby really a small business? Hobbies are not cheap, but if you can turn your hobby into your own business, you can deduct all kinds of things, including home office expenses (see below).
9. Home office expenses: If you conduct business out of your home, do not be afraid of deducting home office costs. The IRS may take a closer look at your return, but it is possible for you to deduct office supplies, computers, and a portion of your living expenses and utilities.
10. Pets: Pet expenses may seem like a real stretch when it comes to a deduction…but there are certain situations where you may be able to deduct some of these items. For example, you may be able to deduct expenses related to a service animal, or if your pet helps you with your business, you may be able to deduct some of their maintenance costs!
Note: As with all of these deductions, you would be wise to consult with a reputable tax firm to be sure that your deductions are in fact legal and will not cause undue attention from the IRS. Contact Success Tax Relief today and let us help you find these and other legal “loopholes” that will increase the amount of your refund.