No one likes to pay taxes, and paying more than we have to is a crying shame. So take a look at this list of commonly overlooked tax deductions that could help you lower your tax bill this April 15:
You can deduct more than those big checks you write to charity. You can also deduct any out-of-pocket expense you incurred if you performed volunteer work on the charity’s behalf. For example, food you purchased for a dinner hosted by the charity, or office supplies you bought for a fund-raising campaign are deductible. If you drove your car on behalf of the charity, you may deduct 14 cents a mile, plus any parking or toll expenses. For all of your deductions, be sure to keep careful records, including a description of the event or work performed, and, of course, receipts.
Students May Deduct Student Loan Payments Made by Parents
Student loan interest is deductible to the person obligated to pay it, usually the student himself or herself. But if parents make those loan payments, the IRS considers it money given to the student, not repayment of debt. That means the student can deduct them from taxes, even if the student doesn’t itemize his or her taxes.
Job Hunting Expenses
With the job market as competitive as it is these days, it’s harder than ever for a job seeker to get noticed by a prospective employer. If you’re looking for a job you may have incurred expenses such as transportation, printing and mail costs, food and lodging if you traveled as part of your job search, and employment agency fees. If so, you can deduct up to 2 percent of your adjusted gross income. You can’t deduct expenses if you’re looking for your very first job, however, and you must be searching for a job in your same line of work.
Moving Expenses for a First Job
If you’ve landed your first job and must move at least 50 miles from home, you may deduct your moving expenses even if you don’t itemize.
Military Reservists’ Travel Expenses
Members of the National Guard or military reserves can write off travel expenses to drills or meetings, including food and lodging. If you drive your own car, you may deduct 56.5 cents a mile, plus your costs for parking and tolls.
Medicare Deductions for the Self-Employed
If you have qualified for Medicare and run your own business – and don’t have employer-sponsored health care – then you may deduct your premiums for Medicare Part B and Part D, as well as the cost for your supplemental Medigap insurance. You can claim this deduction even if you don’t itemize, and unlike other medical deductions, this one isn’t subject to the 7.5 percent of adjusted gross income test.
Tax Credit for Child Care
If you pay for child care while you work, you may claim a tax credit – which reduces the amount of income subject to taxes and applies to your income first, before tax deductions – of 20 to 35 percent of your child care expenses.
However, if your employer offers a family savings account, you’ll probably get a better deal if you use this vehicle to pay for your child care expenses with pre-tax dollars. That can often offer you much greater savings on a larger portion of your child care costs.
Of course, your professional tax expert should be the final word on what tax breaks are appropriate for you and your situation. So seek professional guidance!
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