Tax season is among us, though thankfully it is almost over, but there has been one thing that I have noticed over the years. Taxes are a headache, yes. If you’re like me, you don’t like paying that extra charge to have someone else do your taxes for you. The problem that often comes along with this is that then we tend to take the easy way out when it comes to our taxes and we end up shortchanging ourselves. So I thought I would inform you about just a few of the most overlooked tax deductions. Claim them if you deserve them and then you can have a just a little more money in your pocket.
Out-of-pocket charitable contributions. If you made large charitable donations, you probably didn’t overlook those because they were probably staring you right in the face, but the little things add up too. You can also write off those little out-of-pocket charitable donations as well. Things like the cost of stamps you buy for your school’s fundraiser count as charitable donations. It may not seem like much, but if you do a lot, they can add up.
Student loan interest paid by Mom and Dad. In the past, if parents paid back student loan that their child incurred, no one got the tax break, but things are different now. Now there is an exception to this. If your parents pay back the loan, the IRS treats it as though they gave that money to their child, who then paid the debt. So if the child is not claimed as a dependent, they can qualify to deduct up to $2,500 of student loan interest paid by their parents.
Moving expense to take first job. Now if you probably paid some money on the job-hunt, and that isn’t tax deductible. However, if you moved to get that first job, that’s a different story. If you moved more than 50 miles, you can deduct 23 cents per mile of the cost of getting yourself of your assets to the new area.
Health insurance premiums. Now in some cases, the IRS can be sympathetic to the cost of insurance premiums. For most taxpayers, deductible medical expenses have to exceed 10 percent of your adjusted gross income to be able to be deducted. However, you might be able to deduct one hundred percent of your premium cost if you are self-employed.
Legal fees. If you itemize, certain legal fees pay be tax deductible if they relate to doing or keeping your job, collecting taxable alimony, or any fees dealing with tax advice. However, deductions are subject to the two percent rule, which dictates that the fees must total at least two perfect of your AGI.
Casualty, disaster, and theft losses. Those losses related to your home, household items, and vehicles that weren’t covered by your insurance policy are actually tax deductible.
401K Contributions. 401k plans provide special tax status for retirement status and immediate tax benefit. So if you contribute to a 401k plan, you will lower the amount of your taxable income and there will be a small impact on your take-home pay.