During tax season, individual tax payers are often looking for ways to legally reduce their tax burden. Throughout the pages of IRS regulations, there are a myriad of available deductions that can help you to do just that. Below we have included a few of the most overlooked tax deductions, but this list is not exhaustive. Consult with your tax preparer or professional, such as AccuraTax LLC in Fort Collins, CO, to determine which of these deductions you may be eligible for.
This is a case of a tax break that expires, only to be just as frequently renewed by Congress. However, this particular deduction was made permanent by Congress in 2015. Essentially, itemizers are able to deduct the state income taxes they paid or the state sales tax they paid throughout the year. You can choose whichever ends up giving you the greatest deduction. If your state does not have an income tax, then by using the state sales tax deduction, you are able to receive a deduction you were previously ineligible for.
Even if your state does have the state income tax, by figuring out what you have paid in state sales tax, you might find out that you come out ahead, based on your income and the local tax rates. However, bigger purchases mean additional sales tax that can make this an even larger deduction. Talk with your tax professional to determine which option is best for your situation.
While this is not necessarily a deduction, if your reinvested dividends are not handled correctly, you could end up paying a double tax on these dividends. Therefore, you need to be sure to update your basis to reflect what it is once the new dividends have been purchased. After all, this new basis means that your capital gains have been reduced and any potential tax-saving loss has also been increased. If you aren’t sure what your new basis is in any particular fund, then you need to be sure to ask your fund for assistance. They might already be reporting the necessary information to you, as the IRS requires them to report the sales of shares to both the IRS and the investors.
While we all know to keep the receipts of those big donations, there are little out of pocket costs that can add up throughout the year into a sizeable deduction. For example, if you purchase food to make for an organization’s soup kitchen or items you purchase as part of a fund raising effort can all be considered charitable contributions. Therefore, it is important to document these contributions and keep the receipts. If these contributions are higher than $250, you have to include an acknowledgement from the charity supporting your documentation. If your car was driven for charity, keep a notebook to document all that travel. Currently, the IRS is allowing a 14 cents per mile deduction, plus any parking or tolls.
If you were looking to change your job situation, then you need to keep track of your job search expenses. This deduction will not apply for individuals entering a new career path, but if you are searching within your field, those expenses could add up. Even if you did not land a new job, those qualifying expenses can still be deducted. However, these expenses need to exceed 2% of your adjusted gross income (AGI) or they cannot be deducted.
Some of these costs include:
While you might not be able to deduct your expenses for a job search when you are entering your field, you can deduct moving expenses to locate for your first job. You can receive this deduction even if you choose not to itemize. To qualify, you need to have moved at least 50 miles away from your old home. These costs can include expenses to get yourself to the new location, as well as your belongings.
Finally, there are multiple other deductions available, particularly for military professionals and reservists. By documenting your expenses, your tax professional can determine what you qualify for and how to reduce your tax liability.
Call or click on the link below to connect with one of the professionals at AccuraTax LLC in Fort Collins, CO, to find out which deductions and other options are available to you for reducing your tax liability.
