When it comes to money, saving wherever you can is important. This is especially true when it comes to your taxes. While most people can claim the standard deduction (about $10,000 for those married taxpayers filing jointly and $5,000 for single filers), there may be even better ways to help pad that refund and save a little money on your tax bill through itemization.
From charitable contributions to home mortgage payments, there are a number of ways you can save on your tax bill. Read on to learn about what you might be able to claim as a tax deduction or credit that you aren’t already aware of.
While most people are good at tracking charitable contributions made by check or credit card, those made in kind or in cash often go overlooked. Whenever you make a donation, whether it is financial or goods get a receipt. Just remember, you must make these contributions to qualified organization, not an individual. Over the course of a year, this can really add up.
There are a number of education-related credits and deductions that you might be missing out on, ranging through every stage of education. Perhaps you are saving for your child’s future college tuition through a 529 or are paying off your own degree. Simply check out the range of deductions and credits available to you on the IRS website.
Home Office Deductions
With telecommuting such a popular method of employment these days, almost 30% of Americans work from their homes. Very few actually claim the expenses related to their home office. The trick is to be self-employed with your home office acting as your principal place of work. As an employee, you must be able to prove that you work from home to save your employer office space. If you simply work at home as a perk, you won’t qualify.
If your medical expenses exceed 7.5% of your adjusted gross income this year, consider taking the medical deduction. Unfortunately, most Americans don’t qualify for this deduction, but if you do, you can save quite a bit of money on your tax bill. And remember, the expenditure doesn’t have to be strictly for medication and doctor bills, you can also include things like smoke cessation programs, health club memberships if doctor-prescribed, long-term health insurance premiums, mileage to and from appointments, over-the-counter medication, prescription birth control, fertility treatments, and contact lenses to name some common approved expenses.
Expenses You Haven’t Heard Of
There are a number of “miscellaneous” expenses you probably haven’t ever considered. You can only claim these if they exceed 2% of your adjusted gross income. But take a look and see if you have any of the following:
- Job search expenses, including the cost of resumes, phone expenses, career counseling, and travel between interviews as well as postage.
- Gambling losses – yes these are deductible.
- Investment expenses including IRA account maintenance and brokerage fees – even subscriptions to investment publications.
- Tax return preparation fees – whether you use tax prep software or an accountant, these fees are deductible.