12 Tax Deductions You May be Missing

tax-savingsTax season won’t be rolling around for another 11 months, but if you ask me, it’s never too early to start planning for how you can save on taxes. I’m sure you’re familiar with the idea of tax deductions, but if you’re like over 50% of Americans, you may not know about all of the things that are tax deductible or about how to make sure that you get every tax write off that is owed to you. Fortunately, I’ve compiled a list of the top 12 tax deductions that are easy to get – but commonly overlooked. I hope that they’ll help you save money on taxes in the future.

  1. Non-cash tax donations. Charitable donations are among the most well-known tax deductions, but not everyone realizes that non-cash donations are also tax-deductible. Instead of dropping off clothing anonymously at your local thrift store, go on in and ask for a receipt. If you’ve donated products or services to your neighborhood’s annual Chinese auction, do the same. Having receipts for non-cash donations is the only way to get a tax write off for these contributions.
  2. Health insurance expenses. You are entitled to a tax write off for many and health insurance premiums that you pay, which may even include long-term-care premiums. In order to qualify for a tax deduction, these fees must be added to your medical expense pot, and your health insurance premiums must surpass 7.5% of your adjusted gross income. This restriction applies to salaried employees only – if you are self-employed you can claim 100% of your health insurance premiums as a tax write off.
  3. Medical travel. Most people don’t know that medical travel expenses are tax deductible. This deduction can really add up if you need to travel long distances for medical treatment. You may also be able to request a tax deduction on lodging expenses associated with medical travel.
  4. Volunteer travel. If you volunteer regularly, you cannot claim your donation of time as a tax write off. You can, however, request 14 cents per mile that you travel to and from your volunteer position as a tax write off. studentOr, if you are able to keep track of your exact travel expenses, you can also submit these receipts for exact reimbursement.
  5. Student loan interest. Paying off student loans is often a lengthy and difficult process, but it can be significantly less painful if you’re getting tax deductions for your student loan interest. You can request up to $2,500/year as a tax deduction for your loan interest.
  6. Contributions to your retirement fund. It often seems difficult to stash some money away for retirement, especially if you’re in a low-to-moderate income bracket. But knowing that you can get tax deductions for contributions to your retirement fund could make it a more obvious choice, and a great way to save for the future. Low-to-moderate wage earners can get up to a 50% tax write off on the first $2,000 they put into their retirement fund, so you can save up to $1,000 on your taxes (which is no small sum!). You should be aware that your tax deduction will decrease as your adjusted gross income increases, so take advantage of this way to save while you can. You can also get a tax write off on donations to your 401(k), Roth IRA, 403(b) and Simplified Employee Pension.
  7. Moving expenses. It may be possible for individuals who are moving over 50 miles away to accept a new job to request a tax deduction on their moving expenses. This tax write off is tricky, however, because it only applies in cases when your new job is over 50 miles more than your previous commute. For example, if the new job is 60 miles away from your old home, but you were previously commuting 20 miles, you may not be eligible. Additionally, you will need to work at your new job for at least 39 weeks within the first year of moving in order to qualify for the tax deduction. Still, if you’re moving far away, chances are good that you will be able to save on taxes with this credit.
  8. Home office expenses. If you use a home office as your primary place of conducting business, you can likely save on taxes by deducting many of the business-related expenses such as part of your electric bill or gas bill. In order to claim this credit, however, you must keep very careful records of home expenses and you must be able to justify why you deserve this deduction.
  9. Green purchases. Tax deductions for purchasing energy-efficient products often vary, but for the most part, you should be able to get significant deductions for purchasing energy-efficient windows, hybrid cars, skylights, energy-efficient water heaters (or solar panels) and certain pigmented roofing materials.
  10. Refinancing credits. If you’ve refinanced your home in recent years, you’re entitled to deduct the points that you paid to refinance. Although it may take several years to recoup the money that you paid for the refinancing, the overall savings can be substantial.
  11. Alimony. The amount of money that you can deduct for alimony depends on how much you pay your ex per month and what tax bracket you’re in. No matter what your financial status is, it’s worthwhile to find out if part of your alimony will be tax deductible – chances are good that it is.
  12. Worthless debts. If you’ve lent money to friends or family who has defaulted on the loan, you can claim up to $3,000 per year until you’ve claimed the full extent of the loss.

Response to “12 Tax Deductions You May be Missing”

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  3. Another great non-cash donation is donating a car to charity. There are hundreds of respected charities you can donate car to at Cars4Charities. They pcikup car donations for free and will let you donate car that doesn't run. When you donate car, you get a minimum $500 tax deduction.

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