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10 Tax Deductions You May Not Know About
By admin | September 15, 2007
It’s important to be fully aware of all the tax deductions you could be making because if you aren’t, you could be missing out on a lot of money! Far too many people just drop their tax forms off at the accountants without giving it a second thought.
In some cases there could be a big tax deduction that you are neglecting to make that could significantly affect how much you should be paying.
Here are ten big ones that some individuals forget.
1. High Medical Costs
If you have medical expenses that are higher than 7.5% of your AGI (adjusted gross income), you can deduct your contacts, eyeglasses, hearing aids, prescription medications and equipment expenses. Even more, if you are self-employed, you can deduct 100% of your health insurance premiums above the limits of your AGI.
2. You Are Paying For Your Parents
If your parents are living in a nursing home or if you are supporting them in any way, you can claim them as your dependants so long as they aren’t working and making more than $3200 per year.
3. College Classes
If you have taken some college courses in the recent year, there is something called the Hope Learning Credit or the Lifetime Learning Credit that you can take advantage of (up $1500 and $2000 respectively depending on your AGI).
4. Your Savings For Retirement
If you are being smart and already socking money away for retirement, don’t forget to deduct as much as 50% of the first $2000 that you invest in your IRA account.
5. You Donate To Charity
If you have donated to a charity between August 28 and December 31 and have a donation receipt, this will be 100% deductible for you at the end of the year. If you are donating non-cash items and the total exceeds $5000, break the contributions into different categories.
6. Save On Gases And Taxes
If you decided to save money on gas and purchased a hybrid, you may be able to get up to a $3400 tax break. This offer goes out to the first 60 000 customers who invests in one of these vehicles.
7. You recently bought a new home.
If you’ve just purchased a new home, you can deduct the interest payments of up to $100 000 while purchasing it as long as you meet the income requirements.
8. You Are A Teacher
If you’re a teacher, you can deduct up to $250 for expenses that are usually made for classroom materials. Make sure you keep all your receipts for pens, paper and classroom decorations throughout the year!
9. You Have A Family Owned Business
Those who own a business and choose to hire their children aged seventeen or younger as employees can avoid paying social security taxes. They are also able to deduct their children’s salaries as part of a business expense. The one catch however is that the children cannot earn more than $4850 each year.
10. Work Deductions
If your job requires that you make unreimbursed travel, you might be able to deduct these expenses and any others related to the business trip from your annual taxes. In some cases, even business gifts and entertainment costs can be deducted if they are considered a ‘necessary part of work’.
Alternatively, if you are currently employed but are on the search for a new position, you can deduct any expenses occurred related to your job hunt (such as employment agency fees, resume costs and transportation costs).
So next time you are assessing the taxes you need to pay, make sure you don’t overlook these factors. Remember to keep all your receipts for items you purchase that you may think are applicable so that you can bring them with you to the accountants. It’s always better to check on something that you may not know about than just write assume it’s not deductible. After you learn the first time it is, it could potentially save you thousands of dollars over your lifetime.
Topics: personal finance |
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