The 10 Most Overlooked Tax Deductions
At tax time, your goal is likely not to overpay your taxes (and hope for a refund!). One of the best ways to achieve this is to maximize your annual deductions. We have compiled a list of the tax deductions people overlook most often so you can make sure you keep more money in your pocket.
These small things can really add up!
1. State Taxes
While this may seem silly, this is an easy deduction that people miss all too often. You can deduct the amount of money you paid in state taxes in the prior year.
2. Points Purchased During a Refinance
When you refinance your home, you can deduct the points that you purchase evenly over the course of the loan. So, you can deduct 1/30 of the points you paid each year of a 30 year mortgage.
3. Non-monetary charitable donations
You know how to deduct the cash donations you make to a charity each year, but if you have donated non-monetary items (like clothing, household items or even ingredients for donated baked goods), you should also deduct for these items. You should make sure to keep all receipts with your records in case of an audit.
4. Tax Credits
Tax credits help your overall tax return significantly but are sometimes missed. Experts estimate that the Earned Income Tax Credit (EITC) is not claimed by approximately 25% of taxpayers who qualify. This credit is designed to supplement those who make a low to moderate income. This group of individuals has increased over the last few years because of the tough economic times.
5. Child Tax Credit
You should also make your sure you maximize your child care deductions. This is another area where families sometimes leave money on the table.
6. Expenses Related to a Job Search
While you cannot deduct expenses for looking for your very first job, expenses related to additional job searches can be deducted. This can include transportation costs, employment agency fees, printing/advertising costs and cab fares.
7. Travel expenses for members of the military reserve
If you are a part of the military reserve or National Guard and travel more than 100 miles, you may be able to deduct the cost of lodging, and half the cost of your food and mileage.
8. Reinvested Dividends
If your mutual fund automatically reinvests your dividends, this increases your tax basis in that fund. This can be an important calculation that can really save you some money. If you have any questions about this, you might want to seek help from a tax firm.
9. Student Loan Interest (paid by parents)
This is a new one…the IRS treats student loans paid back by your parents as if they gave the money to you to pay back. If you are not classified as a dependent, you can then deduct up to $2500 of the student loan interest paid back by your parents!
10. Jury money paid to your employer
If you served on jury duty but were required to pay this to your employer since they paid you during this time, you can deduct this amount.
As you can see, there are many possible deductions that could help you keep from overpaying the IRS. It might also be wise to seek the help of a reputable tax firm to help sort through which of these deductions might apply to you. Success Tax Relief is a full service tax firm with more than 30 years of experience working on behalf of our customers. We specialize in helping our clients receive all possible deductions, allowing you keep your money in your pocket. Contact us today to make sure you’re not overlooking any deductions.