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10 Commonly Overlooked Personal Tax Deductions

Personal tax deductions are the best way to lower your adjustable gross income and minimize the tax bite every year. Many families do not itemize their annual deductions which is a mistake as it can save the average tax filer hundreds if not thousands of dollars per year. Below is a list of the 10 most commonly overlooked personal tax deductions.

1. Tax Preparation Fees, Schedule A, Line 22

Yup, it seems kind of circular, but you can deduct the cost of tax preparation on your Schedule A. If you paid taxes and used a credit or debit card, you can also deduct any convenience fees. This won't apply if you decided to go with free online tax preparation software and services, but you can write off paid services like TurboTax, H&R Block, or TaxACT.

2. Hobby Expenses, Schedule A, Line 28

While your little hobby may not actually qualify you for the full small business tax deductions, you do still get to deduct some expenses for it. The trick is that you can only deduct for as much income as you made. So if your obsession with orchids in a home garden netted you $300 but cost you $1,000, you can only deduct $300 in expenses. This is useful for you to recoup at least some money if you have a small business which has gone three years without a profit at which point the IRS categorizes your operation as a hobby. There's no sense in getting 1099s and paying excessive taxes on that little bit you did manage to make! Whether you're buying and selling collectibles or collecting coins, be sure to set aside a budget for hobby expenses and deduct the appropriate amount on your tax return.

3. Property Taxes on a Timeshare, Schedule A, Line 6

Frequently, your portion of the property taxes paid on the timeshare will be included in your yearly maintenance fee. Check the statement to see if they are separated out. If so, you can deduct them in the same manner as property taxes on your main residence. Additionally, if you sold a home or timeshare this year, any property taxes you had already paid should be on your settlement statement and can be deducted even if you don't own the property anymore.

4. Educator Expenses, Form 1040, Line 23

If you worked at least 900 hours during the school year in K-12 as a teacher, aide, counselor, or administrator, and bought ordinary and necessary back to school supplies for the classroom out of your own pocket, you can deduct up to $250 worth of these costs right on your 1040. If you spend more than $250, you can deduct the rest on Schedule A. Since every person I've ever known who's worked in education buys things for their students or for school use, you might as well throw those receipts in a drawer and get yourself some money back!

5. Charitable Mileage, Schedule A, Line 16

While it's widely known that cash or goods donations to charity are tax-deductible, did you know that you can track your mileage and get a charitable donation deduction for that as well? If you drive to your volunteer location or run any errands while volunteering, keep a log of your miles, and you can deduct 14 cents per mile, plus parking and toll fees. You can also deduct the fees you pay to use public transportation to get there and back. This is similar to tax deductible job relocation moving expenses, only for charity.

6. Contributions to Fraternal Lodge Societies, Schedule A, Line 16

These are also considered charitable donations, up to a point. Dues that are specifically required of members are not deductible, but donations above and beyond that which are used for qualified charitable purposes (such as the Shriners hospital funds, or donating to local charities) are considered charitable donations even though the society actually disbursed the funds. This is up to a maximum of 30% of your adjusted gross income.

7. Losses Due to Theft or Destruction, Schedule A, line 19

If your car was hit by hailstones or you lost siding in a natural disaster, and your home or auto car insurance didn't cover the repairs, you can deduct the loss of value, or how much the value of the car or home has gone down since being affected. Similarly, if you were a victim of home burglary and valuable items were taken, and you either didn't get reimbursed by your homeowners insurance or you weren't reimbursed for the full amount, you can deduct the remainder that you weren't reimbursed. You must complete Form 4684 to determine the amount that you can deduct. Each loss that you wish to deduct is subject to a $100 "deductible" of sorts, in that you have to subtract $100 from the amount you are going to deduct, plus any amounts you were reimbursed by insurance. This is another instance where adding in smaller deductions is frequently worth the time!

8. Lifetime Learning Credit, Form 1040, Line 50

Did you take a knitting class or pick up some sign language or other life skills at your local community college this year? How about continuing education classes for your job? These count towards your Lifetime Learning Credit, for up to $2,000 in tax credits. You can get this credit for classes taken by your spouse or any dependent as well, as long as you aren't already using a different credit for them and aren't part of an employer tuition reimbursement program.

9. Medicare B and D Premiums, Schedule A, Line 1

According to the IRS, Medicare B and D premiums, which you sign up for voluntarily, can be deducted as a medical expense. Also, if you aren't eligible for Social Security, such as if you moved to the United States in retirement, and you voluntarily enroll in Medicare A, you can deduct your Medicare A premiums as well.

10. Breastfeeding Equipment and Pumps, Schedule A, Line 1

A recent IRS ruling has declared breast pumps and other equipment needed for breastfeeding to be medical equipment, and thus can be deducted on your Schedule A. Since these pumps are often extremely expensive, and are frequently bought at a time when the mother's income is low, this can help get your medical and baby expenses over the 7.5% deduction requirement.