The legendary musician Miles Davis has a famous quote when asked about the definition of jazz music: “If you have to ask, you’ll never know…” Luckily for us, taxes don’t work that way—just about anything that you’ve spent money on can be deducted. The more you know about what can be deducted, the more you can save. This is especially true if you can Find a Tax Preparer that is up to the task.
Here at Donna J Jackson & Associates, PLLC we understand that there may be some ambiguity on just what can you deduct on your taxes. To accommodate this and ease your anxieties, we’ll be taking a look at some common and not-so-common items/methods that you can deduct on your taxes.
For states that don’t have any income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming—and to a lesser extent, Tennessee and New Hampshire), it is in your best interest to deduct state and local sales taxes paid.
By filing your taxes as a standard deduction instead of the more-laborious itemized deductions, you will save time by accepting a pre-approved rate. The IRS provides a list of standardized amounts per income levels. There are a few advantages to this method, as you may not have enough itemized deductions to equal the standard deduction. Consult an Accountant to determine the best course of action for your financial future.
If you have expenses related to higher education, you may be eligible to claim a deduction of up to $4,000 in tuition and fees paid for yourself, your spouse or a dependent. To see how much you qualify for, consider consulting an experienced Tax Preparer.
If you choose to donate goods, such as clothing or appliances, you are eligible for deductions. The advantage of this deduction is that you are allowed to claim the fair market value (what you would normally earn from private buyers) amount. For vehicles, make sure to donated to qualified charities {ex. 501(c)(3)}. Because of the variable nature and the need of accuracy to avoid a costly audit, Find a Tax Professional for what you can deduct on your taxes. See the link at the end of this article for more information.
Did you know that your medical and dental expenses can be deducted for you, your spouse, and your dependents? The catch is that there’s a bit of math involved: you can deduct the total medical expenditures exceed 10% (7.5% if you or your spouse is over 65 years old) of your adjusted gross income (AGI). For example, if your AGI is $50,000 and your medical bills are $10,000, you are entitled to $5,000 worth of deductions.
In a cyclical sort of way, you can deduct the fees that come from preparing your taxes, whether you took a DIY approach or hired an Accountant. Some of these costs include electronic filing fees and tax return preparation.
Do you use your car for your job or business? If so, you may be eligible for deductions related to the costs incurred for business use. This is extremely useful for frequent travelers, as each mile allows for a $0.54 deduction.
Also, if you have to pay baggage fees, meals, lodging and laundry, those are deductible, as well. It is a good rule of accounting to not include extravagant or lavish purchases, as they don’t qualify for the business travel expenses deduction.
You can deduct legal fees related to conducting or retaining your job, collecting taxable alimony, or tax advice. One exception to deducting legal expenses is that you cannot file claims you paid to defend against charges that arose from participation in political campaigns.
Is your best friend a one-armed bandit? Winnings from gambling are taxable and therefore must be reported to avoid penalties. If you suffered gambling losses, you can deduct up to the amount of gambling income you reported. Losses can be claimed as miscellaneous deduction.
Life if not always fair, but Uncle Sam recognizes that something monetary losses are out of our control. If your losses are related to your home, household items and vehicles AND they haven’t been covered by insurance or reimbursed, the losses could be deductible.
Teachers have a tough job and very often dig into their own coffers to provide quality education to our nation’s youth. For educators from kindergarten to 12th grade, they may claim deductions up to $250 for any unreimbursed expenses, which includes books, supplies, computer equipment and other supplementary materials. There is a catch, however. To qualify, educators must work at least 900 hours in a school year.
Being a freelancer is an uncertain career path for many, but luckily, they can count on health insurance being deductible. Premiums paid for medical and dental insurance are deductible, as well as qualified long-term care insurance for yourself, your spouse and your dependents.
There is power in the union. While some feel that their union dues are just part of a way to fleece workers, those same workers should be aware that union dues and expenses are included among deductions. This deduction also includes initiation fees and dues you pay for union membership.
Donna J. Jackson & Associates, PLLC