The first days of spring are now only a few weeks away, and with it comes tax season. It’s already time to begin thinking about ways to save on your taxes. That means it’s also time to start gathering and organizing information you can use to ease the burden of tax preparation and avoid the last-minute rush. Below is a big tax deductions list of 47 often overlooked deductions for which you may be eligible but might not be aware you can claim.
Getting a good tax return is something to look forward to. If you need cash, while you’re waiting for your tax refund, or any other time, contact Money 4 You Loans for speedy cash installment loans.
What’s a Tax Deduction?
Tax deductions, also called “tax credits,” do not reduce tax rates, per se. But, deductions can contribute to reducing the net amount you are ultimately required to pay. Including the tax deductions you are entitled to claim in your IRS tax filing, lowers the amount of income on which you’re charged income tax.
There are two ways to claim income tax deductions on your federal income tax return:
- You can claim the IRS’s preset standard deduction. This approach offers the best savings and convenience if you have not accumulated enough deductions beyond the amount of the standard deduction to save by filing a long form.
- You can itemize your deductions. If you have incurred a considerable total amount of deductible expenses through the year, you may realize substantial savings by claiming itemized deductions on a long-form tax return.
47 Things You Might Not Know Are Tax Deductions
The more you know about allowable tax deductions, the more you can reduce your IRS tax bill each year. You might already be claiming mortgage interest, medical expenses, property taxes, and other common deductions.
To help increase your tax savings, here is a broader list of tax deduction examples, including a lot of less often claimed deductibles that you may not have been aware you can use:
- Items you must buy for work, but are not reimbursed
- Job search expenses
- Union dues and union fees
- Losses in an IRA account
- Contributions to a health savings account
- Senior citizen tax deduction
- 401K (deduction of contributions from taxable income)
- Losses due to theft or casualty
- Health Insurance Premiums
- Contributions to a Health Savings Account (HSA)
- Home office expenses
- Purchase made by teachers for use in classrooms
- Tax preparation expenses
- Lifetime learning credit for college courses and materials
- Bad debts from lending money you cannot collect
- Pay for jury duty that you turned over to your employer
- Auto registration fees
- State and city income taxes
- IRA contributions
- 401K losses
- Donations and gifts to charities
- Gambling losses
- Health insurance premiums for the self-employed
- Rental cost of safety deposit box
- Legal fees
- Investment costs
- Various expenses for hobbies
- Credit for the care of a child or other dependent
- State or local sales tax
- Swimming pool, if purchased for medical purposes
- Work-related expense for breast implants
- Earned Income Tax Credit (EITC)
- Childcare while doing volunteer work
- Donations made in cash
- Donations of your talents and time
- Medical expenses
- Dental expenses
- Eyeglasses expenses
- Losses from theft, casualty, or disaster
- Home improvements
- Energy-saving home upgrades
- Unusual business expenses
- Reinvested dividends
- Interest on student loans, paid by yourself or another person
- Moving expenses for your first job
- Child and Dependent Care Tax Credit
- Refinancing interest on mortgage
How Much Can You Gain By Tax Deductions?
As you can see from the extensive, yet partial list above, there is a large array of tax-deductible expenses. Keep in mind that the kinds and amounts of allowable deductions and the ways and circumstances under which some deductions can be applied are subject to change from year to year.
So, examine your possibilities for saving through itemizing your deductions each year, even if you did not have enough deductions to itemize for the previous year you filed. Do some research, and use a tax deductions calculator, to see how you might be able to use deductions to minimize the amount of income tax you’re required to pay.
Before you decide that itemizing is too much trouble, consider what you can save for each $1,000 in expenses you can deduct. For example:
- If your income falls into a tax bracket in which you are taxed at 15%, you can save $150 for each $1,000 you are able to deduct from your taxable income.
- If your bracket’s tax rate is 30%, you can save $300 for each $1,000 you are allowed to deduct. On $3,000 of deductions, you’ll save nearly $1,000.
This is not meant intended to be Tax or Financial Advice. Please consult a Tax Accountant or Financial Professional for advice</em?
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