It's tax time and deductions can help save you money.
Many legal deductions go unclaimed each year because most Americans still don’t know they exist.
From cost savings for eyeglasses to approved deductions for airline baggage fees, no matter who you are, you’re likely to find at least one applicable deduction on the list below—and odds are you qualify for more than one.
So read carefully, the savings can add up…
Job-hunting costs are applicable expenses that can be added to your itemized deductions. Did you spend out-of-pocket costs traveling to interviews or spend money stationery for resumes and cover letters? If so, deducting these items can make a big dent at tax time. And one doesn’t have to be officially unemployed to qualify. Searching for a better job, even while fully employed, is perfectly acceptable. Other applicable deductions include food and lodging for overnight stays, cab fares, and employment agency fees. If that new job is your first job, any incurred moving expenses may indeed be deductible. To qualify for the deduction, your first job must be 50 miles or more from your previous residence. Those who qualify can deduct the cost of moving and, if you drove your own vehicle for the move, deduct 23 cents (2015) a mile plus parking and tolls. While everyone recognizes that necessary medical items like wheelchairs and hearing aids may be deducted, few realize that eyeglasses and contacts also fall into the same category. While designer eyeglasses, or drug store magnifiers, may not seem like medical devices, the IRS does allow these deductions – a big cost savings at tax time. Though we all known charitable contributions are tax deductible – one of the most common ways that Americans gain tax deductions – many less obvious acts of charity also qualify, Out-of-pocket charity expenses such as the cost of paint and poster board for a school fundraiser, or the cost of delivering meals or chauffeuring other volunteers can be deducted. Such mileage deductions may be totaled at a rate of 14 cents (2015) per mile plus parking and toll fees. Deductions will require a written acknowledgement from the charity involved. Members of the National Guard or military reserve may claim a deduction for travel expenses to drills or meetings. In order to qualify, the service member must travel more than 100 miles from home on an overnight journey. Applicable deductions include lodging, meals, and 57.5 cents (2015) per mile plus parking and toll fees. For those employees who have served on juries in the past year, jury duty may represent a taxable deduction. Many employers continue to pay their employees during the time of jury proceedings, but require the employees to turn over jury pay as a recompense for the time away. To even things out, you can deduct the amount you give to your employer. In such cases, the write-off goes on line 36 – the line totaling up deductions that get their own lines. Add your jury fee total to your other write-offs and write “jury pay” on the line directly to the left. Airline baggage fees are another deduction that is rarely recognized by the American traveling public. All told, these fees can add up to serious costs. If you’re self-employed and travelling on business, you can add those costs in as approved business deductions. While many tax credits for energy-saving home improvements have expired, the most valuable credits still exist until 2016. These applicable credits will effectively refund 30% of the of alternative energy upgrades such as solar hot water heaters and geothermal heat pumps. In most cases, one can only deduct mortgage or student-loan interests if one is legally required to repay the debt. But if you’re a non-dependent student who still receives help from mom and dad, you parent’s generosity may help you at tax time. If mom and dad pay your loans, the IRS treats the money as a gift to the child who used it to pay the debt. As such, a non-dependent child can qualify to deduct up to $2,500 of student-loan interest paid. Be advised, however, that mom and dad can’t claim the interest deduction. Legally, it’s not their debt.
Just remember, in order to get the most out of your tax returns, you must stay as organized as possible, and do your research—no one likes getting audited.
