10 Common Overlooked Tax Deductions
There are numerous tax deductions which can prove to be extremely beneficial to many families come tax season. Some deductions are obvious like the Earned Income Credit or Charitable contributions but others may be less so. Below are a list of the 10 most overlooked tax deductions you should be aware of as it could save you hundreds or thousands of dollars which means more money for you and your loved ones.
1. Charitable Mileage
Many people are aware that their charitable contributions can be deducted if they itemize their taxes. However, you can also deduct the mileage that you travel in the service of your favorite charity.
When you travel to and from the charity location, or if you are running errands on behalf of the charity, you can deduct 14 cents per mile. You also get to deduct what you pay for parking and tolls. And, if you take public transport, you can deduct those costs as well. Just make sure you keep good records.
2. Tax Preparation Fees
When someone else prepares your taxes, or even if you prepare them yourself using paid software, you can get a deduction for the cost. Deduct the cost of your accountant, your TurboTax software, and even convenience fees that you might be charged.
It's worth noting, too, that financial planning fees, and fees paid for financial management, can also be deducted from your income.
3. Educator Expenses
It can be easy to overlook expenses you pay as an educator. However, you do have that option if you worked at least 900 hours over the course of the year as an educator in a K-12 setting. You can take your deduction in two places: There is a line on Form 1040 for amounts up to $250, and beyond that you can Schedule A to deduct your expenses.
4. Property Losses
If you had a property loss, due to destruction or theft, you can deduct some of what you paid for repairs, and even for the decrease in value to your home. You do have to follow the rules, though. No deduction for amounts covered by your insurance company, and you have to have paid more than $100, since the first $100 you pay isn't tax deductible.
5. Blogger Tax Deductions
Even if you only blog for side hustle purposes, you can still get a tax deduction for some of your expenses. Some blogger tax deductions include online expenses for advertising, hosting and domain registration.
As long as you use them only for your side business, you can also deduct home office supplies. If you have a hobby of other kinds as well, you can deduct some of your expenses.
6. Legal Bills
In some cases, you might be able to deduct legal bills as long as you paid for services that net you taxable income. You won't be able to deduct the expenses paid when you hire a lawyer to represent you in a custody case, but if you hire someone to help you get alimony, and you end up with that new income (which the government can tax), then you can deduct your expenses.
7. CD Withdrawal Penalties
When you withdraw money early from a certificate of deposit, it comes with a penalty. This can cut into your earnings from the CD, as well as offer annoyance. You can recoup some of that cost when you deduct the penalty on your taxes. So, if you ended up with such a fee, make sure to remember to deduct it.
8. Property Taxes Paid on a Timeshare
In a number of cases, when you have a timeshare, the property taxes you owe are included in the yearly maintenance fee that you pay.
Read through your statement, because if your maintenance fee is broken down on the statement, you might be able to enjoy a tax deduction. Check to see what portion of the fee is going toward property taxes, and deduct as much as you would your regular property tax payments.
9. Medicare Premiums
Your Medicare Part B and Medicare Part D premiums might be tax deductible as medical expenses. This can be a great help if your premiums have been on the rise. On top of that, those who aren't eligible for Social Security, and enroll in Medicare Part A, can deduct those premiums.
10. Breastfeeding Equipment
If you buy a breast pump, and other equipment, you can deduct the cost as a medical expense, since the IRS considered it one. Remember, though, that medical expenses have to exceed 7.5% of your adjusted gross income if you want to deduct them separately. You can increase the deductibility of your medical expenses with the help of a Health Savings Account.
Bottom Line
These are great deductions, but make sure that you are eligible before you take them. Some deductions require that you meet certain qualifications. When in doubt, check with the IRS web site, or consult a knowledgeable tax professional.
