If you dread tax season every year, you might not be taking advantage of all the great and easy tax write-offs that are available to many Americans.
The vast majority of American taxpayers take the standard deduction, but factoring in these write-offs could save you even more. So before you take the standard deduction, consider whether or not you qualify for these easy write-offs.
- Dental expenses
Did you get a few root canals these year? Did you get braces for both the kids? You can deduct dental expenses for you, your spouse, and your dependents as long as they total at least 10% of your adjusted gross income. If you are 65 or older, you only have to spend 7.5% of your adjusted gross income.
- State taxes
Believe it or not, there are some instances in which you can deduct state taxes you paid from your federal taxes. If you live in a state that imposes sales, income, or property tax, you can deduct your taxes paid, and then report these itemized deductions in Schedule A. You can deduct income taxes or sales taxes from your state, but not both.
- Fees for tax preparation
Did you know that the money you pay someone to do your taxes is actually deductible? If the cost of preparing and filing your taxes exceeds 2% of your adjusted gross income, you can write it off in the miscellaneous tax deductions section.
- Moving expenses
If you moved last year, you can deduct some of your moving expenses as long as the move was due to a change in job, business location, or the starting of a new job. The deductions must be reasonable expenses, and they cannot include meals. There are also distance and time tests you must pass. The new job must be at least 50 miles farther from your old home than your old job was, and you must be working full-time for at least 39 weeks during the first 12 months of the new job.
- Charitable donations
This is one of the easiest deductions. As long as you saved receipts, you can write off any donations made to charitable organizations. You can deduct supply donations as well, not just monetary donations, so those bags of clothes you dropped off at Goodwill count.
- Job searching expenses
If you had to look for work in the past year, you may be able to deduct associated expenses. You have to be looking for a job that’s in the same line of work as your previous position. If you quality, you can deduct transportation expenses, the cost of printing and mailing resumes, employment agency fees, and more from your next return.
- Medical expenses
Just like you can deduct dental expenses, you can also deduct medical expenses, as long as they make up at least 7.5% of your adjusted gross income. If you’re self-employed or take care of your own health insurance, you may even qualify to deduct 100% of the cost of your health insurance premiums.
If you paid a babysitter or daycare to watch your child while you were contributing to a charitable organization, you may be able to write off these costs as charitable contributions. If you regularly employ a babysitter or daycare to assist you with childcare, you may actually qualify for the child and dependent care tax credit, which is even better.
- Hobby expenses
If your hobby generates income on the side, you do have to report that income. However, you can also report deductions associated with the costs of that hobby. Deductions must be for expenses that are both ordinary and necessary for that hobby.
- Social security
If you’re self-employed, you’re paying a 15.3% self-employment tax to cover both your and your “employer’s” social security contributions. However, you can deduct the amount your employer would have paid in a traditional employment setting, 7.65%, from your income.
- Jury duty pay
Many employers ask you to surrender your jury duty pay to them if you were paid your regular salary while performing jury duty. If this is the case with you, you can deduct that jury pay from your income.
- Gambling losses
In the great old U.S. of A you can even deduct gambling losses if you had a particularly unlucky year. You just have to make sure that those losses were properly documented so that you can provide proof.
- Early withdrawal penalties
If you withdraw savings from your 401k, certificate of deposit, or other retirement accounts early and have to pay a penalty, you might quality for a deduction. This deduction would allow you to deduct the penalty paid from your income.
- Auto expenses
Do you use your personal vehicle for work on a regular basis? You may be able to claim a deduction for any ordinary and necessary costs associated with the business use of your car. This includes visiting customers, traveling from one work location to another, attending a business meeting that’s not at your place of work, and more. You can deduct mileage as well as depreciation, registration fees, insurance, repairs, oil, tolls, parking fees, and more, depending on the circumstances.
- Home office
If you work from home, you may qualify for a home office tax deduction. You must use the home office regularly and it must be solely for business purposes. It must also be the main place where you work. You can deduct everything from utilities and internet to repairs and building costs to mortgage interest.
- Teacher expenses
As a teacher or educator, you often pay for supplies and items for the classroom out-of-pocket. The IRS allows you to deduct these expenses from your income as long as they’re properly documented. However, you can only deduct up to $250 in teaching related expenses.
- Mortgage interest
You can deduct the interest paid on home loans of $1 million or less. If you qualify to deduct the interest paid on your mortgage, you may also qualify to deduct the points paid, or prepaid interest.
- Legal fees
If you had any legal fees you needed to pay in order to do your job, tax consulting fees, or alimony legal fees, you can deduct those from your income.
- Stolen property
There’s even a tax deduction for theft and casualty losses. The total losses from the theft must come out to at least 10% of your adjusted gross income, and you need to first subtract $100 from each loss. You can’t deduct these losses if you were already reimbursed by insurance.
As you can see, there are plenty of easy ways to save money on your taxes. Make sure you get your write-offs in this year, and next year, you might not dread tax season so much.
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