Top 20 things that you can deduct from your taxes

Top 20 things that you can deduct from your taxes

As soon as it is time to file your tax returns, your face changes color and you grumble and mutter to yourself while filling out your tax forms. But, you need not worry as there are many items that can also lower your tax liabilities or increase your tax refund. In your hurry of filing your tax returns, make sure you don’t forget to include the following 20 deductions:

Moving Expenses

If you are moving to another place for a new job, you can include this in your tax deductions. This reduces your gross income and your tax liability is deducted. You can qualify for this deduction if you qualify for the distance test, the time test and if you are moving because of a new job.

Student loan interest

If you are a college student who has taken a massive student loan and are now cribbing about it, it’s time to relax.  When you are filing for your tax returns, you can deduct a massive amount of the interest on these loans. Make sure the lender hands you a 1098-E Student Loan Interest Statement when you take a student loan from him.

Contributions towards charity

Any charitable contributions that total below $5,000 can be deducted from your tax returns but make sure you itemize it and keep all the receipts of your contributions.

Sales and real estate taxes

You must know how to itemize so that you can deduct real estate taxes on your home, sales tax and state income from your tax returns.

Expenses Involving Home Offices

If you work in a home-based office, then the taxes on real estate, utilities, insurance, depreciation and mortgage interest can be deducted from your tax returns. But make sure that there is a dedicated portion of your house that is exclusive for business purposes or the Internal Revenue Service can cancel this deduction.

Commuting costs

The Internal Revenue Service allows you to deduct costs related to travelling for business purposes. But, you also need to note that if you travel to and from your regular place of work, it is not counted as a deduction. There is no need to worry, as now many companies are enrolled in commuter programs like TransitChek. If you are one of those lucky few, then you can make pre-tax deductions like parking charges, repairs etc from your income.

Income Tax Credit That Is Earned

You can reduce your tax liability considerably by claiming the earned income tax credit that is based on your marital status, children and income. If you are 25 or older and earn just $14,590, you can save with this policy.

Medical Expenses

If you incur high medical costs, you can deduct this from your tax returns but it has to exceed 7.5 per cent of your total income. This includes medication expenses, expenses involving travelling to and from the doctor’s office and special education therapies and programs.

Expenses Related To Pets

This might seem like an odd tax deduction but you can opt for it if you have a service animal that helps you with any medical condition you may have. This has to be over 7.5 per cent of your total income. You can also classify them as a business expense if they in anyway help in your business at home or maintenance of your farm.

Teaching expenses

In case you are a teacher and use your money on class supplies, you can deduct this expense to a certain degree from the tax returns.

Learning Expenses

The importance of education could not be exemplified more by the government than by the fact that it allows deductions for your learning expenses, no matter how old you may be. It must be in one particular field and should help further your career and you can always clarify whether your expenses are deductible, using the Internal Revenue Services’ tax assistant tool.

Side Jobs

If you have many side jobs, you can always include the expenses involved in making that extra money as a deduction in your tax returns.

Health Savings Account

You can save a lot on your tax returns if you are eligible for a health savings account. It also helps pay the medical bills, so you should definitely avail such an account.

Tax preparation fees

Yes, you can even deduct the expenses you incurred for tax preparation that include the paid preparers’ fees, any software that helped prepare the returns and tax-related books. But the fees must be greater than 2 per cent of your total income, for it be considered.

Mortgage Interest Deduction

If you have taken a mortgage on your home that amounts to around $1.1 million, you can deduct the interest from your returns.

Job Hunting Expenses

You can deduct any expenses you incurred when switching jobs or looking for another job like resume and card printing costs and cab fares. But this is not applicable if this is your first job or if you have been unemployed for an extended time period.

American opportunity Tax credit

This credit only applies if you are an undergraduate in the first four year of college and can reduce your income tax by $2,500.

Early Withdrawal Penalties

If you have withdrawn an amount from your savings account and reported the income, then the early withdrawal penalty that you had to pay is deductible from your return.

Savers’ Credit

If you make $45,000 or less, and start saving for your retirement you can avail the savers’ credit policy that deducts around 50% of the first $2,000 you deposit in your retirement account.

Small business or hobby expenses

You can deduct any necessary expenses if you own a small business like money for fertilizers, seeds etc. This is deductible even if your business does not make much profit.