Six Tax Deductions You Don’t Want to Miss This Year

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You know that feeling you get when you know that you’re forgetting something? It happens to me every year during tax time. I’m sure that I could have found more write offs but because of my less than stellar receipt keeping skills, the IRS is probably getting more from me than they should. On the other hand, I’m sure there were more deductions that I could have taken if I knew they existed.

Kiplinger agrees and that’s why they posted some of the most overlooked tax deductions. Some are overlooked because they apply to a small portion of the population but here are the deductions that I thought had the widest appeal. In the end, regardless of which IRS tax bracket you’re in, every deduction counts.

Charitable Donations

You know that donations to popular charities, church, and other non profit organizations are eligible for a write off but there a lot more expenses that qualify. Did you purchase food for a church dinner or mail invitations for a school PTA event? All of these smaller expenses that you incurred on behalf of the non-profit are deductible. If it’s more than $250 you’ll need to have the organization document your donation and give you a letter or receipt but providing you have receipts to prove that you spend the money out of your personal funds, don’t forget to include these purchases.

Student Loans

Student loan deductions are hardly a secret but did you know that you, the student, can write off money paid towards your loans by your parents? Since the loan is legally your responsibility, any payments made are credited to you. They can claim the deduction unless you’re still a dependent of your parents.

Job Search

If you’re one of the many Americans currently looking for a new job, keep track of the money you spend while searching. If you have to travel, all of those expenses are deductible including airfare, lodging, and a rental car. Subscription fees for job search websites as well as the printing of business cards, resumes, and the costs of mailing those materials all count as a deduction.

Child Care

This is a little more complicated but worth the time to figure out because it’s a credit. A credit, unlike a deduction, is a dollar for dollar reduction in your tax liability. If you don’t have an employee sponsored plan that allows you to pay for child care expenses with pretax dollars, you may qualify for a credit of 20% to 35% of the money you spent for childcare while working. The employee sponsored plan is a better deal and since you can’t benefit from both programs, use the employee plan over the tax deduction in 2012.

Jury Duty

Many employers pay you as if you were working if you are called to jury duty. In exchange, they may ask you to hand over your jury duty paycheck to them in exchange for your normal pay but on your tax return, you still have to claim it as income. In order to deduct the money that you didn’t actually receive, head to line 36 on the 1040 form and deduct it there.

Baggage Fees

The idea of sticking it to somebody over those baggage fees may be exciting but unless you’re self-employed, this deduction doesn’t apply. If you do own your own business, add those baggage fees to your deductible travel expenses. It’s an easy one to forget since we would like to forget about those fees anyway.

The most overlooked tax deductions are the ones that you forgot about over the course of the year. If you’re not very good at keeping records, consider an excel spreadsheet to log deductions as they occur and use the Turbotax It’sDeductable free service to help. We have a moral obligation to pay what we owe but don’t let bad record keeping cost you more in taxes.

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3 Responses to “Six Tax Deductions You Don’t Want to Miss This Year”

  1. Texas Wahoo says:

    To take a student loan deduction for money paid by your parents, I assume you have to be reporting that money as a gift?

  2. Scott says:

    For child care, the tax credit is typically better than a dependent care FSA only for low-income earners.

  3. Anonymous says:

    Can a person give their grown children a gift of $13,000 each and take that off as a tax right off.

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