Monday, February 16, 2015

The 6 Most Overlooked Tax Deductions

RSC writes: Tax season can be one of the more stressful times of year, and the rules seem to change just when you learned them. What you may not realize, though, is the abundance of deductable expenses, and how you can use them to your advantage. Take a look at these specific, relevant deductions you can apply this tax season, and get the most out of your efforts.
  1. Charitable Donations

While this type of tax deduction is fairly well-known, not many people realize just how creative you can get with the concept of charitable contributions. These can include:
  • Donating money to your church (or other tax-exempt organization)
  • Out-of-pocket expenses related to volunteer work
  • Travel expenses to and from
  • Books and tutoring materials
  • Tickets to educational events
  • Childcare expenses
It is, of course, the very nature of charity to give without expecting something in return. That doesn’t mean, however, you should sacrifice when filing your tax returns.
  1. Travel for Business

This one can be vague and even nonsensical. You can drive hours a day in congested traffic without being able to deduct a penny, (and we’ve got some of the worst traffic in the nation). This changes, however, when you participate in commuter benefits programs like ASI Flex or TransitChek. Once your employer enrolls with such a service, you can make deductions from your monthly paycheck to cover anything related to commuter expenses, including:
  • Parking costs
  • Bus passes
  • Car/van-pooling
  1. Student Loan Interest

    Students who pay more than $600 in interest to a single lender should get a 19098E form showing the amount paid, and deduct it when filing. Here’s a great added benefit: they can deduct payments made by parents too! Here are the requirements:
  • The child can no longer be a dependant
  • They can deduct up to $2,500 a year in interest paid
  • They do not need to itemizeThe obvious downside is that you personally cannot write off the expense because you are not responsible for the debt. That doesn’t mean, however, your grad can’t reap the benefits, which leads to our next tip:
  1. Moving for a New Job

    You can’t deduct expenses incurred while looking for your first job, but you can for expenses moving to it. If someone moves more than 50 miles to their new job, they can deduct $0.23 a mile, along with the costs of moving household items and up to a month of storage costs. The downside: you need to itemize each expense.
  2. Reinvested Dividends

    Bear in mind, this is a subtraction, not a deduction, though it will still save you a lot of money. By now, hopefully you’ve heeded the sage advice of others and invested in a mutual fund. If, as most do, your dividends are automatically reinvested. This reduces the capital gain, and increases the tax-saving loss. If you remember to include this when filing you can save a lot of money. If not, you get taxed for the amount twice; (once at the time the dividends were earned, and again when they’re considered part of the sales proceeds).
  1. Filing Taxes

    You can deduct a myriad of expenses related to tax preparation itself. These include the cost of tax preparation software, tax publications, and even incidental costs such as making copies or overnight delivery!