If you view taxes as a game, it makes the entire process of filing a tax return more enjoyable. However, make no mistake about it – this is a game with high stakes .If you want to win the tax game, you need to maximize every tax deduction so that you can save the most money possible.
Unfortunately, most taxpayers have a tendency to overlook or forget about certain deductions. As a result, they end up losers, while the IRS takes the victory. To help you avoid a similar outcome, we’re providing a handy list of some of the most commonly overlooked tax deductions.
Charitable Donations and Gifts
Let’s start with charitable donations. While most people are aware of the fact that major contributions can be deducted on a tax return, it’s the smaller donations and gifts that typically slip between the cracks. Little expenses might not seem like very much when viewed in isolation, but they add up.
Whether it’s food purchased for a charity’s benefit concert, clothes donated to Goodwill, or a small gift to a missionary from your church, all of these small amounts count. Keep receipts and be meticulous about recording these expenses.(Note: With the introduction of the Tax Cuts and Jobs Act (TCJA) last year, the standard deduction has increased from $6,500 to $12,000 for individuals (and from $13,000 to $24,000 for married couple filing jointly).
Your accountant can help you determine whether you should take the standard deduction or itemized deductions. Until you know, it’s best to keep all records on hand.)
Mileage for Work, Medical, and Charity
If you use your car for business purposes, have driven for moving or medical purposes, and/or volunteer for a church or charitable organization and operate your own motor vehicle, you can deduct mileage driven.
For the 2019 tax year, standard mileage rates are as follows:58 cents per mile for business miles driven20 cents per mile for medical or moving purposes14 cents per mile for charitable organizations or service work, The easiest way to track these miles is to use a mileage app that records your driving logs and produces a simple spreadsheet that you can use to support your deduction
As gambling becomes increasingly legalized throughout the United States, it’s important that more Americans realize they can deduct certain gambling losses (with restrictions).The first key is that you can only take gambling loss deductions if you itemize. Secondly, your deduction is limited to the amount of gambling winnings you report on your taxable income.
Currently, deductible gambling losses include losses suffered at casinos and racetracks, as well as non-winning lottery, bingo, and raffle tickets. For those planning to take this deduction, the IRS requires some pretty extensive documentation – including receipts and names and locations of the gambling establishments.
This one is technically a credit – which actually reduces your tax bill dollar for dollar – but we’ll throw it on the list anyway. After all, it’s one of the most commonly forgotten tax breaks.
On top of getting an automatic $2,000 tax credit per child, parents can also claim a childcare tax credit if they paid for childcare during the tax year. Depending on your income status, you can get between 20 percent to 35 percent (up to $3,000) for a child under the age of 13, an incapacitated parent or spouse, or another dependent – provided you used the care to work or pursue employment.
Owning a home can get expensive. Thankfully, there are situations in which you can lower your taxable income through home-related expense deductions. Examples include: Any expenses incurred in making your house more energy efficient can be deducted (up to $500). Similarly, 30 percent of the cost of new energy efficient appliances can be deducted from taxes.
If you paid to make your home safer – like removing lead paint or asbestos – these expenses are tax deductible .If you refinanced, you can deduct the cost of points, as well as the expenses related to the refinancing process. If you qualified for a mortgage credit certificate from a state or local government, you can deduct up to $2,000.These are just a few illustrations. Your accountant can help you figure out if any of your home-related expenses qualify for a deduction.
Student Loan Interest
If you’re one of the millions of young Americans saddled with student loan debt, you do get one tiny break. The interest paid on these student loans is tax deductible. It’s also worth noting that it doesn’t matter who pays off the student loans.
If, for example, your parents paid down some of your student loans in the previous year, the IRS treats this money as a gift. You can claim the interest they paid on your taxes! (In order to be eligible, you can’t be claimed as your parents’ dependent. Additionally, the deduction is capped at $2,500.)
Job-Related Moving Expenses
Did you incur expenses looking for a job? Any money spent on transportation, food, lodging, resume printing, etc. can be deducted from your taxes. Did you have to move because of a transfer or change in employment?
Any out-of-pocket expenses involved in these situations is also tax deductible. Just make sure you keep meticulous records and receipts. (If your employer covered some of the costs, the portion they paid or reimbursed you for is not deductible on your tax return.)
Jury Payments Paid to Employer
When jury duty calls, you have no choice but to show up and await your fate. And if you were selected to actually serve on a jury, you should’ve received a small stipend. Today, it’s common practice for employers to continue paying an employee’s full salary while they serve on the jury.
However, there’s a catch: The employee typically has to turn over their measly jury pay. Despite this, the IRS still views the jury pay as your taxable income. To help offset this, you can deduct 100 percent of the amount you gave to your employer.
Losses Due to Theft or Casualty
Any losses caused by vandalism, theft, fire, storm, or other natural disasters, as well as boat and car accidents, may be tax deductible. There are a lot of caveats and requirements, but it’s worth looking into.
Generally speaking, the total amount of these losses must be greater than 10 percent of your adjusted gross income (AGI). In other words, if your AGI is $100,000, your total losses for the year will need to be greater than $10,000.
Certain Medical Expenses
In certain cases, you can deduct out-of-pocket medical expenses. Most of the time, these expenses have to exceed 7.5 percent of your adjusted gross income on the year. You’re even able to deduct home improvements that are completed for medical reasons. (Examples include wheelchair ramps, support bars, or lowering cabinets.)