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Most Overlooked
Deductions
Ordering
TurboTax Online Software
Out-of-pocket charitable contributions.
It’s easy to remember charitable
gifts you made by check
or payroll deduction. But you can write
off out-of-pocket costs you incur while
doing good works. Supplies, ingredients stamps you
buy for your charitable fundraiser count
as a charitable contribution. If you
drove your car for charity you can deduct 14 cents per mile.
State taxes you paid last spring.
Did you owe when you filed your
previous year state
return in the following spring? Then
remember to include that amount with
your state deduction on your
following years
return, along with state income withheld from your paychecks or paid via
quarterly estimated payments.
State Sales
Taxes. You must choose between either
deducting state income or state
sales, for most people living in income taxed states,
the deduction is generally a
bigger deduction.
For Sales, the IRS has a
calculator
on its Web site to help you figure out
the deduction, which varies by your
state and income level.
Reinvested Dividends. This isn’t
really a deduction, but a subtraction
that can save you money. If
you have mutual fund dividends
automatically invested in extra shares,
remember that each reinvestment
increases your basis in the fund.
That in turn, reduces the taxable
capital gain, or increases the
saving loss when you redeem shares.
Remember to include the reinvested
dividends in your basis which you
subtract from the proceeds of sale to
pinpoint your gain so you don't overpay.
Student loan interest paid by Mom and
Dad. If Mom and Dad pay back a
student loan, the IRS treats it as
though they gave the money to their
child, who then paid the debt. So, a
child who’s not claimed as a dependent
can qualify to deduct up to $2,500 of
student loan interest paid by Mom and
Dad.
Moving expense to take first job.
Moving
expenses to get to that first job are
deductible, and you get this write-off
even if you don’t itemize. If you moved
more than 50 miles, you can deduct the
cost of getting yourself and your
household goods to the new area,
including 20 cents per mile along with parking fees and
tolls for driving your own car.
Military reservists’ travel expenses.
If you are a member of the National
Guard or military reserve, you may
qualify for a
deduction for travel expenses to
military events. To qualify, you must travel
more than 100 miles and be away from
home overnight. If you qualify, you can
deduct the cost of lodging and half the
cost of your meals, plus 48.5 cents per
mile and any parking or toll fees for
driving your own car. You get this
deduction whether or not you itemize.
Child care credit. A credit is so
much better than a deduction—it reduces
your bill dollar for dollar. So
missing a credit is more costly than
missing a deduction which simply reduces
the amount of income that’s subjected to
it. See
Child Credit for more info
Refinancing points. When you buy a
house, you get to deduct points paid to
obtain your mortgage in one fell swoop.
When you refinance a mortgage, though,
you have to deduct the points over the
life of the loan. That means 1/30th a
year if it’s a 30-year mortgage—that’s
$33 a year for each $1,000 of points you
paid. And, in the year you pay off
the loan, because you sell the house or
refinance again, you may get to deduct
all the remaining undeducted points,
unless you refinance with the same
lender. In which case, you add points
from the new loan to the leftovers from
the previous loan and deduct the
expense portion-ably over the life of the new
loan.
Jury pay, paid to employer. Some
employers continue to pay employees’
full salary while they are doing their
civic duty, but ask that they turn over
their jury fees to the corporate
treasury. The only problem is that the
IRS demands that you report those fees
as taxable income. You need to deduct the amount, so you
aren’t charged on money
passed through your hands.
Estate charges on income in respect of a
decedent. If you
inherited an IRA from someone whose
estate was big enough to be subject to
the federal estate taxes. Basically, you
get an income deduction for the
amount of estate paid on the IRA
balance. Itemized deduction Schedule A.
Deductions
Standard
Deductions
Itemized
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