Hello and welcome back to Part 2 of our 3 Part blog series on significant tax deductions that many people often forget. In Part 1 we talked about different deductions that are often overlooked and why that’s not a good thing to do, especially considering the extra money you could be putting into your retirement account, an emergency fund or into your 401(k). (We think you’ll agree it’s better off there than in Uncle Sam’s coffers.)
Today we’re going to do the same thing and so, without further ado, let’s get started. Enjoy.
If you reached the age where you qualify for Medicare, but you still own and run your own business, the premium you pay for Medicare Part B an Part D, and the cost of any supplemental Medicare (Medigap) policies, can be deducted from your taxes. One thing to keep in mind is that if you’re eligible to be covered under a health plan subsidized by your employer (because either you or your wife still has a job and business at the same time) you can’t claim the deduction.
Any tax expert will tell you that a credit is always better than a deduction because of the fact that it reduces your tax bill dollar for dollar. That makes missing a credit worse than missing a deduction and, when it comes to paying for child care while you work, many people miss this deduction and the extra savings that it brings.
You would be best advised to talk to your accountant on this one because it’s a bit complicated, but if you have estate tax on income in respect of a descendent, it’s a big deduction that can save you tons of money if you happen to have inherited an IRA from someone in your family, and their estate was big enough that federal estate taxes could be applied.
Depending on the company you work for, it’s possible that while you serve jury duty in your town, your employer will continue to pay your full salary. If this happened to you, you also know that you have to turn over your jury pay to the company’s coffers when you’re finished, and also report those fees as taxable income. If you’re keen on evening things out, money-wise, deducting the amount you gave back to your employer is what you need to do.
Our last forgotten deduction is baggage fees that you pay when traveling. Although the airlines seem hell-bent on charging their customers for every last service that they provide, baggage fees are truly the worst. What used to go free, at least to a point, now costs an arm and a leg. Luckily, if you’re self-employed and you travel a lot on business, you can deduct those annoying baggage fees as a deductible travel expense.
That does it for Part 2. We hope that this second set of forgotten tax deductions was just as entertaining, and educational, as the first set. If you have any questions or need any advice, please send us an email or leave a comment in the comments section.