Five Tax Deductions that People Regularly Overlook

| November 24, 2013 | 0 Comments

Taxes

Tax time is rough enough as it is. It becomes a lot rougher when you realize that you overpaid on your taxes.

Every year Americans overpay millions of dollars on their taxes. Because there are so many nuances in the tax realm that people regularly miss, unless you hire a professional to do your taxes for you, you’re likely giving money away that rightfully belongs to you. This can range anywhere from a few tax dollars that you could have deducted for baggage fees or thousands of dollars that you could be saving on energy-saving home improvements. Regardless, money is money, and it gets annoying when you figure out you are giving it away.

Here are five of the biggest deductions that Americans regularly overlook come tax time:

Out-of-Pocket Charitable Deductions

Most people understand that they can write off large charitable donations that they make throughout the year, but more often than not, people tend to overlook the smaller ones. For instance, if you spend $20 on sandwiches you prepare for a non-profit event, you can write it off as a charitable deduction. Even that cookie dough that you buy for your school’s fundraising can get written off.

Job-Hunting Costs

If you are one of the millions of Americans that lost his or her job during the recession, you can write off your expenses as part of your miscellaneous expenses if you itemize. For instance, you can write off transportation expenses that resulted from your job search, including 55.5 cents a mile on gas, cab fares, costs that are incurred from printing your resume and even food in some instances.

Furthermore, if you move more than 50 miles away to get your first job, you can write off the expenses it took to get you and your household goods to the new area. That includes 23 cents per mile on gas.

Deduction of Medicare for Premiums

If you are self-employed and qualify for Medicare, you can deduct the premiums you pay for Medicare Part B as well as Medicare Part D. Even better, you don’t need to itemize and the deduction isn’t subject to the typical 7.5 percent of AGI test that applies to itemized medical expenses. If you do qualify for employer-subsidized health plans or your spouse’s employer offers family medical coverage, you don’t qualify.

Baggage Fees

Everyone hates baggage fees, yet the airlines continue to push them on customers. Most people would be happy to know, though, that you can add baggage fees and fees associated with changes in travel plans to your deductible travel expenses. Though it only applies to people that are self-employed and traveling on business, it can save a lot of money in the long run.

Credits for Energy-Saving Home Improvements

You can deduct up to ten percent of money spent on energy-saving home improvements, including new windows or insulation. Though the deduction can only amount to $500, it can be $500 that many people would not have otherwise, and, considering that most people make some sort of energy-saving improvement to their home, it can make quite the difference.

If you are one of the millions of Americans overspending on taxes, do some research and figure out what loopholes are out there that are suited to your needs. More likely than not, you will find something that you are missing.

This guest post was written by Patrick Rafferty. As a business professional in the New Orleans area, he’s taken a particular interest in finding the most business friendly of the Metairie Banks and the Banks in New Orleans. The views expressed herein are those of the author and not necessarily those of any financial institution or bank. This article is intended to provide those reading it with information about matters of current interest.  It should not be construed as legal or financial advice concerning a specific topic and should not be acted upon without contacting the appropriate professionals.

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