Looking for a list of tax deductions? Here is a Baker’s Dozen of frequently overlooked types of tax deductions for you to use when you file
Job-Hunting Expenses – Keep close track of your job-search expenses, mileage, tolls, parking – and anything else related to your job search. If you’re looking for a position in the same line of work, can become tax deductions, if you itemize. These expenses can be written off even if you didn’t find new work. But such expenses can be deducted only if your total miscellaneous expenses exceed 2 percent of your adjusted gross income.
- Transportation, including 56.5 cents a mile for driving your car plus parking and tolls
- Food and lodging expenses if your search takes you away from home overnight
- Cab fares
- Costs of printing resumes, business cards, postage, and advertising
For a full list of legitimate tax deductions, check out IRS Publication 521.
Child-Care – You can anywhere from 20 percent to 35 percent of what you pay for child care, while you are at work. If your place of employment offers a child care reimbursement accounts — paid with pretax dollars — that’s likely the better deal. If you qualify for a 20 percent credit and are in the 25 percent tax bracket, the reimbursement plan is definitely the way to go.
State Sales Taxes – The IRS offers you the choice between deducting the state income taxes or state sales taxes you paid. You may choose whichever gives you the largest deduction. Sales of services and items that a company purchases wholesale–assuming the buyer has a wholesale permit from the state–are not usually applicable to sales tax, so if you are self-employed, you should use the state income taxes.
Charitable Deductions – Any donations you made during the year, by check or payroll deduction (should be listed on your December pay stub) are deductible. You can write off out-of-pocket costs incurred while doing work for a charity including the eggs and flour you used for the church bake sale, or the chicken soup you donated to the soup kitchen. Even your postage for mailing invitations to the bake sale count as charitable contributions.
Military Reserve Travel Expenses – Members of the National Guard or any military reserve unit can write off the cost of travel to drills or meetings that are more than 100 miles from home and require an overnight stay. You can deduct the cost of lodging, half the cost of your meals, 56.5 cents per mile, plus parking fees and tolls.
Medicare Premiums (Self-Employed) – If you run own businesses after qualifying for Medicare, you can deduct the premiums you pay for Medicare Part B and Medicare Part D, plus the cost of supplemental Medicare (Medigap) policies. You can’t claim these tax deductions if you are eligible to be covered under an employer-subsidized health plan offered by either your employer.
Baggage Fees – If you’re self-employed and travel on business, be sure to add those costs to your tax deductions as travel expenses.
Last Year’s State Tax – Did you owe tax last year? Then include that amount in your state-tax deduction for 2013 federal return, along with state income taxes withheld from your paychecks or quarterly estimated payments you made.
American Opportunity Credit – Get a tax credit of 100 percent of the first $2,000 spent on qualifying college expenses and 25% of the next $2,000. The credit per student of $2,500 is available to individuals whose adjusted gross income is $80,000 or less ($160,000 or less for couples filing jointly).
Beefed-Up Expensing – Supercharged “expensing,” can apply to up to $500,000 worth of new equipment. This credit lets you write off the full cost of qualifying assets in the year you put them into service. The $500,000 cap phases out dollar for dollar after $2 million worth of assets.
Middle-aged Self Improvement Credit – You can deduct up to $2,000 a year (20% of up to $10,000 you spend) for college or vocational education. Classes need only enhance or add to your job skills. Classes you take even in retirement at a vocational school or community college. Single taxpayers qualify for full deduction if their yearly income is less than $53,000 and less than $107,000 for couples filing joint returns.
Home Improvement Credit –2013 may be the end of 10 percent deduction for qualifying energy saving upgrades (windows and insulation). If you made qualifying improvements in 2013—and you did not use up the maximum $500 credit (only $200 of which can be for windows) in earlier years—be sure to cash in with your 2013 return.
Even more important, if you have installed qualifying residential alternative energy components (hot water heaters, geothermal heat pumps or turbines). Your credit can be 30% of the total cost (including labor) of any devices installed through 2016.
2013 Bonus Depreciation – Two years ago, the 100 percent bonus depreciation to deduct the full cost of any equipment put into service during the tax year. Previously a business could only write off the cost of new equipment over many years. For 2013, the bonus depreciation is 50 percent. This is an opportunity to save some serious money.
For a complete list of tax deductions, check out the IRS website.
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