We all want to maximize our tax deductions so we can minimize what we owe Uncle Sam. Most of us prefer to do it without venturing into questionable grey areas. Kiplinger created a slide show of frequently overlooked tax deductions, and we’re sharing a few of them with you. They’re all sanctioned by the IRS, and they can save you a considerable amount of money. For specific details and to view the entire slide show, click here.
TAX DEDUCTIONS TO KEEP IN MIND
Out-of-Pocket Charitable Contributions
Expenses that you incur while doing charity work can be written off. For example, if you cooked for a nonprofit’s soup kitchen, the groceries you bought to prepare the food are considered charitable contributions. If you drove your car on behalf of a charity, that’s a write-off, too.
If you’re looking for a job in your line of work and you itemize on your tax return, you can deduct job-search costs as miscellaneous expenses if they exceed 2% of your adjusted gross income. Expenses include mileage, parking, tolls, food, lodging, cab fares, employment agency fees, and the cost of printing resumes and business cards.
You can qualify for a tax credit worth between 20% and 35% of child-care expenses incurred while you work. If your employer offers a reimbursement account that lets you pay for child care with pre-tax dollars, that can be an even better deal.
When you refinance a home, you deduct the points on the new loan over the life of that loan. So if you refinanced with a 30-year loan, you can deduct 1/30 of the points each year.
State Tax Paid Last Spring
If you paid tax when you filed your state income tax return in 2012, remember to include that amount in your state-tax deduction on your 2013 federal return. You can also deduct state income taxes withheld from your paychecks or paid by quarterly estimated payments.
Airline Baggage Fees
If you’re self-employed and traveling on business, you can deduct baggage fees as legitimate travel expenses.
Energy-Saving Home Improvements
If you made qualifying improvements in 2013 and did not use up the maximum $500 credit in previous years, you can get a tax credit that’s worth 10% of the cost of qualifying energy savers. Also, if you installed qualified alternative-energy equipment, your credit can be 30% of the total cost.
Social Security Taxes for the Self-Employed
If you’re self-employed and therefore entirely responsible for paying the 15.3% social security tax, you get to write off half of what you pay.
Medicare Premiums for the Self-Employed
If you’re on Medicare and run your own business, you can deduct the premiums you pay for Medicare Part B and Part D, plus the cost of any supplemental policies.
And our final word of advice: remember to save your receipts!
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