Tax season is upon us, and with it comes a lot of work and a lot of stress. It is everyone’s goal to come out of a tax filing with some extra money in pocket – or at least to have to come up with as little out of pocket as possible. Therefore, it is extremely important not to miss any and every possible deduction you can take whenever you are preparing your tax forms. If you are not an expert in tax code, then it is likely there are some deductions you could miss if you are not conscious of them. Here are some commonly overlooked tax deductions to watch out for:
State sales tax. It is hard to miss this deduction, but many people skip over it in favor of the state income tax deduction, which makes sense, considering state income taxes are often the bigger tax burden. However, you might want to reconsider if you have made any large purchases over the past year, as sales tax on automobiles and homebuilding supplies can really add up. Many people overlook the sales taxes they paid on these major items, and therefore fail to even make the comparison when itemizing their deductions.
Charitable donations. It is easy to forget the small contributions you make toward charities over the year, but it pays to keep records of them because they really can add up. In addition to that furniture you dropped off at the Goodwill, you can also write off payments to your child’s PTA fundraiser, any supplies involved in making those cakes for the bake sale, and any mileage your car incurred while driving to and from charitable events, among other things.
Caregiver expenses. If you are the responsible caregiver for you parent, then you can write off the costs associated with providing that care, from nursing home bills to in-home health aides.
Mortgage-related costs. You can write off any points you paid to get your new mortgage loan or refinance your existing mortgage loan, as well as any interest you paid on your mortgage over the course of the year.
Job-related expenses. Costs related with finding a job, maintaining a job, and moving for a job can be written off. Common expenses that often get overlooked include transportation to and from interviews and training, employment agency fees, moving company fees, and costs associated with marketing yourself for a job (business cards, resumes, websites, etc.).
It may be possible for you to fare better on your taxes this year if you dig in this list of commonly overlooked deductions. Tax time requires some serious time and thought, but if you put those two things in, you can increase your chances of getting more (or giving less) in your annual dealings with the IRS.
About the Author: Maryalice Dunwoody is a tax advisor who enjoys helping family members and friends maximize their returns. When she’s not working, she relaxes with the oolong tea she loves most and searches goldenmoontea.com for new blends and gifts for others.
Commonly Overlooked Tax Deductions to Watch Out For by Nancy