A few years back, the gentleman who was running the IRS spoke do Kiplinger’s Personal Finance magazine and said that, when it came to paying taxes, millions of taxpayers overpaid their taxes every year by overlooking one or more of the money-saving deductions listed below.
If you don’t want to be one of those people, check out the list of tax deductions we put together below and get the most money back from Uncle Sam that you can this (and every) year. Enjoy.
First there’s the deduction for state sales taxes, which many people believe is expired but, even though it does expire, Congress regularly reinstates it. If you think that this doesn’t matter because you live in a state that doesn’t collect state income taxes, Congress actually gives you the choice of deducting either the state income taxes or the state sales taxes that pay. Lucky for you, you get to choose the largest of two and, if your state doesn’t charge income tax, writing off your sales tax is obviously a no-brainer.
Then there’s the deduction for Reinvested dividends which technically aren’t tax-deductible but are an important subtraction that can save you a lot of money. This is the tax break that IRS Commissioner Fred Goldberg told Kiplinger’s that many taxpayers were missing, costing them millions in overpaid taxes every year.
Many people, while remembering to deduct their big charitable gifts, make the mistake of forgetting to deduct their out-of-pocket charitable contributions. These small gifts add up, including ingredients for you that you made for a nonprofit organization or soup kitchen, clothing that you donate to goodwill or anything you purchase from your child’s school fundraiser. And get this; if for whatever reason you drove your car for a charitable organization, you can deduct $.14 per mile and also tolls and parking that you might have paid while doing it.
And how about this one for learning lesson; many people forget to deduct the student loan interest paid on their child’s college tuition. If your child is no longer being claimed as a dependent on your taxes, and you are paying back their student loans, up to $2500 of the interest you pay can be deducted based on a tax calculator.
If you were out of work last year and spent time, energy and money searching for a job, the costs of your job hunt can be deducted as miscellaneous expenses even if you don’t get a new job. One caveat is that the expenses that you incur while looking for your first job don’t qualify for deductions.
If you’re a member of the National Guard or any type of military reserve, you can also write off the cost of your travels to any type of meetings or drills that you have. The travel itself must be 100 miles or further from your home and to qualify you need to stay overnight as well. If you do, half the cost of your meals, a car allowance and the cost of lodging can be deducted.
Those 6 tax deductions should get you started quite nicely!