Filing taxes is right up there with dying: you have to do both. At least with taxes, you have the incentive of deductions. We spoke with Pesach Woznica of PW Tax, an international tax firm, to get advice on deductions that so many people overlook. Use this list to see what money you might be missing.
1. Gambling Loss
If you had a bad year at the tables, you might be entitled to claim some of your losses. You’ll have to itemize your deductions, and the losses you claim cannot be more than your winnings which you must file as income. Here’s an example. If you have $5,000 in winnings and $7,000 in losses, your deduction is limited to $5,000. Hey, it’s better than a total loss.
2. Surprising Student Loan Deduction
You can claim interest on your qualified student loan if you—or even your parents—paid the interest. There are four criteria listed on the IRS website. 1) Your filing status is NOT “married filing separately.” 2) You are not listed as an exemption on somebody else’s return but 3) your name is on the loan as the borrower. 4) You paid interest on the loan. Even if your parents paid the interest, it’s as if they gave you the money and you paid it. Parents, if your name is on the loan, then you can claim the deduction as long as you meet the other criteria above.
3. Theft
If you lost money because of theft and cannot seek reimbursement from other sources, like your insurance company, you might be able to claim a deduction. The IRS includes these evil practices as theft: blackmail, embezzlement, extortion, kidnapping for ransom, burglary, and of course, theft of property. Calculate your total loss from each event (Hopefully it was only one event of theft.) and then subtract $100—the IRS’s automatic deductible. You can claim anything over 10% of your adjusted gross income. (If your adjusted gross income is $30,000, 10% is $3,000. You can deduct any losses over $3,000.)
4. Car Insurance
If you were in a car accident and your insurance policy has a deductible, you can claim part of the deductible you paid as a loss. Like with theft, you first have to subtract $100 from the cost. You can claim the amount that exceeds 10% of your adjusted gross income. Even if you do not file an insurance claim, you can seek this deduction because your insurance would not reimburse you for the deductible anyway.
5. Moving For Work
If you got a new job this year (Congratulations!) and you changed residences to be closer to work, or because you started a business, you might be able to claim some moving expenses. There are requirements, of course. For starters, you have to move within the first year of your starting date, and your new home must be closer to work than your former abode. Also, your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new workplace must be at least 50 miles from your old home. Finally, you must work full-time hours for at least 39 weeks of the first year.
6. State Tax
You can claim the taxes you paid to your commonwealth either in income taxes or in sales taxes. “Or” is the key word. You can deduct the state and local income taxes you paid last year that are not reported on your W-2. Here’s the key word: OR, you can deduct the state and local sales tax you paid. This would be more beneficial for you if you are not required to pay state and local income tax, and therefore didn’t pay it, or if your purchases last year surpassed your income. Just make sure you have the receipts to prove your claim.
7. Jury Pay Handed To Employer
It’s good to have an employer who is supportive of the American judicial system and sympathetic to employees who are called to jury duty. These employers might continue to pay your regular salary while you sit for your civic duty…which pays a paltry daily stipend. If your employer ask for the stipend in exchange for your higher salary, you will still be taxed on both: your salary and the stipend you gave away. After you list the amount of the stipend on the “other income” line of your 1040, claim it as an “adjustment to income” on line 36. You can even claim expenses related to your time on the jury if you itemize your deductions.
8. Military Travel
If you’re part of the National Guard or Reserves (Thank You!), you can deduct travel costs to meetings and drills. There are two requirements: 1) You must travel 100+ miles from home and 2) you need to stay overnight. If you satisfy these criteria, then you have these write-offs waiting for you: mileage plus the costs of lodging, parking, tolls and half the expense of your meals.
9. Medical And Dental Expenses
You can deduct qualified medical and dental expenses if they exceed 10% of your adjusted gross income. Included in the list of all the possible deductions are ambulance costs, prescribed birth control pills, breast pumps, breast reconstruction surgery, artificial teeth, eye exams and lenses, drug and alcohol addiction therapy, and even crutches to help you walk. These expenses must “alleviate or prevent a physical or mental defect or illness,” according to the IRS’s Publication 502 Medical And Dental Expenses.
10. Trade Shows And Seminars
If you are a business owner or an entrepreneur and you attend events to support your business via learning information or networking, you could claim a deduction. Employees can also claim these expenses (as well as travel, lodging and meals) if the employer does not reimburse you and you were required to attend, or going to this type of event is commonplace in your industry.
11. Home Energy Improvements
If you made a home improvement that increases the energy efficiency of your home, you might be entitled to as much as a $500 tax credit. (Tax credits, unlike deductions, count dollar for dollar toward the money you get back.) The improvement must be in place and in service by the last day of the year. Qualifying installations include insulation, ENERGY STAR exterior doors, windows and skylights, as well as ENERGY STAR metal and asphalt roofs. Also included are energy-saving central air conditioners, biomass stoves, and other HVAC equipment.
12. Renewable Home Energy Systems
You can get a tax credit of 30% the cost of adding qualifying renewable energy technologies to your home. Not only will these help the environment and save you money on a monthly basis, they’ll get you a break on your taxes. These include fuel cells, geothermal heat pumps, solar panels* and wind turbines that generate electricity for the home, and solar-powered water heaters*. (*Be sure to talk to your tax preparer before you install these in order to get a tax break.) Of course there are a bunch of IRS rules attached to this.
If you know of any other typically overlooked deductions, share them in the comments section.
[Featured image credit: www.waveridercommunications.com]
