Writing Sample-20 Most Overlooked Tax Deductions

20 Most Overlooked Tax Deductions

As the end of the 2008 draws near, most people will probably agree that this has not been the most lucrative of years. People from all walks of life have suffered great financial losses this year while trying to survive beneath a crumbling economy. So it’s no surprise that taxes are the last thing anyone is interested in talking about now. But what if talking about taxes now, saves you some money in a couple months, or even help increases the size of your refund? You’d start talking.

How about talking about deductions? It’s always best to be aware of deductions you plan on taking through out the year, so that you can make sure you are keeping track of the necessary items to help you claim your deduction. Though you should have a CPA that is already aware of all the deductions that are available, they may not always be aware that some of those deductions might be available to you.

So it’s up to you to stay informed, and keep your tax person in the know. Here’s a list of twenty tax deductions that you may be overlooking.

  1. The depreciation of your cell phone. That’s right if you use your cell phone for “the convenience of your job” you can deduct the depreciation value.
  2. Medical Expenses. You can deduct the cost of most additional medical expenses you accrue during the year that aren’t covered by your insurance. That includes hearing devices, eye-care (glasses & contacts), contraceptives (by prescription), not to mention travel expenses related to medical care, and even childbirth classes. Special bonus if you’re self-employed, you can deduct 60% of your health insurance premium!
  3. Childcare tax credit. If you have kids, chances are your tax person will get this in automatically, but you want to make sure. Now, even if you have a reimbursement account for child care services at work, you can still take advantage up to $6,000 (for two or more children). You could be talking about cutting your tax bill here, don’t miss it!
  4. College tuition. You, yourself, or any dependant, are eligible to deduct up to $4,000 in college tuition fees.
  5. Student loan interest paid by mom and dad. Until recently you could only deduct student loan interest if you were liable for the debt and actually paying it yourself. Now if mom and dad are paying back the loan, the IRS treats as if it’s a gift. So if your not claimed as a dependant you can go ahead and deduct up to $2500. Thanks mom!
  6. State tax paid. Did you owe on your state tax last year? Well get it back! The IRS allows you to deduct what you paid to the state last year. Of course you can’t deduct the fees and penalties…
  7. Home business expenses. The items that can be claimed for deduction here are numerous and depend exactly on the business. A daycare for instance can deduct portions of grocery, mortgage, rent, arts & craft supplies and utility bills. A freelance web designer on the other hand can deduct paper, toner, and computer software. The IRS has an extensive section on home-based business deductions, but you should always go over, in detail, with your tax person what it is you do for a living. The best rule of thumb, keep track of everything you use for business!
  8. Job-hunting. Just because you found yourself unemployed this year, doesn’t mean the IRS doesn’t allow you a little something. Any expenses you accrue while searching for a job are fair game.
  9. Moving expenses for a new job. If the job you find is more than 50 miles away, you can deduct the cost of moving your household there.
  10. Alcohol and drug recovery. Amy Winehouse says No, No, No, but the IRS says yes, yes, yes, to deducting expenses related to rehab and recovery efforts.
  11. Gambling losses. Speaking of vices, did you lose big in Vegas this year? The IRS feels your pain. Since the IRS makes you pay taxes on your gambling winnings, they will also allow you to deduct some of your gambling’s losses as well.
  12. Natural disasters and theft. Though the IRS can’t quite make up for being a victim of a natural disaster or theft, they do allow you to claim a deduction.
  13. Charitable contributions. That doesn’t just mean the check you write for your local church, but everything else including the cost of ingredients for the beef stew you made for the soup kitchen down to the stamps you purchased for your child’s school fundraiser.
  14. State sales tax. Even though everyone has a chance to take this deduction, it makes more sense for folks in states that don’t have a sales tax. The choice must then be made between state income tax and state sales tax. Even though the IRS gives folks who live in states with sales tax a clear table of what they can deduct, that’s not always the end. You can add the sales tax you paid on a vehicle, boat, or airplane that you purchased. In some places You can even add home building materials. Check with your tax person to see what you qualify for.
  15. Job related. This is another category that includes numerous deductions. Things like education to improve your skills, clothing needed for work, tools, union dues, are all fair game. If you spend money out of your pocket on something work related, ask your tax person and see if you can deduct it.
  16. Owning a home. The deductions that fall under the category of home ownership add up, and shouldn’t be missed. Keep track of your entire home owner expenses and again, go over all of it with your tax preparer.
  17. Last years lost deductions. Did you not qualify for certain deductions last year because of income? Maybe a technical glitch kept you from claiming one. In most cases the IRS will let you have this year.
  18. Investment Expenses. Investment advisory fees, Fees for a safe-deposit box to hold investments, Margin account interest expense, IRA trustee’s administrative fees, Worthless stock or securities, as well as Theft or embezzlement losses are only some of the legitimate deductions related to investment.
  19. Mom & Dad. That’s right, if you furnish more than half of the support of your parents, you can claim them as dependants.
  20. Last year’s preparation fees. So are ready to make your tax preparer earn their money this year? Don’t forget to deduct the money they earned last year too!

Now that your armed with a wealth of information about what you may or may not be able to deduct this year, what are you going to do with it? Keep clear track of all your expenses, and if you plan on taking advantage it’s always best to have a tax person you trust to help guide you. It’s your job to make sure they have all the information, and it’s their job to make sure that information is used to your full advantage.

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