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7 Commonly Overlooked Deductions To Keep In Mind
Posted Date: 15 Feb 2008 Resource Type: Articles/Knowledge Sharing Category: Education
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Posted By: Moneyonline Member Level: Silver
Rating:  Points: 3
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If you want to get the best tax refund then you need to make sure you include all available deductions on your income tax return. Deductions are the key to reducing your taxable income and getting a tax refund. However, millions of taxpayers are not up to date with current deductions and often miss valuable opportunities to save money. Below are 7 commonly overlooked deductions that you may want to include on your own tax return.
1. Medical Expenses
If your medical expenses for a single year total 7.5% or more of your adjusted gross income then you can deduct the expenses from your taxable income. Although the total percentage required may seem high, if you plan elective surgeries or other pricey medical expenses you can easily meet the requirement.
2. State Sales Tax
The IRS allows you to deduct the total cost of state income taxes or your total sales tax paid the previous year. If you live in an area without state or local income taxes then you should deduct your total sales taxes paid.
3. College Tuition
The IRS will allow you to deduct up to $4,000.00 paid in college tuition on yourself, your spouse, or any dependents. This break can be especially beneficial to taxpayers whose income is too high to qualify for the Hope or Lifetime Learning credit.
4. Smaller Charitable Contributions
People hardly ever forget to claim the big charitable contributions they make, but the little things also add up. For example, if you volunteer at a bake sale remember to deduct the cost for ingredients you used to prepare the baked goods.
5. State Taxes Paid the Previous Year
If you paid additional taxes to the state in the previous year then you can also deduct those expenses from your current income tax return. You can also deduct state income taxes withheld from your paychecks or quarterly payments.
6. Jury Payments Forfeited to an Employer
Many employers who continue to pay an employee's full salary while they are serving jury duty request that the employee forfeit their jury payments. If your employer has this rule and you served on jury duty this year then you can deduct the total amount from your taxable income.
7. Cost of Income Tax Preparation
You can deduct any expenses you incurred to have your tax returns prepared. This includes tax software and actual tax preparation services. However you need to include these costs in the tax year you paid them. Thus, you would claim your 2005 cost of tax preparation expenses when completing your 2006 tax return.
Source: http://www.1articleworld.com
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