50 Tax Deductions You Might Be Missing

50 Tax Deductions You Might Be Missing

It’s heading into tax season (we just heard you sigh). Most people truly don’t understand the use of tax deductions which sadly, means they aren’t getting all the money back that they should.

Tax deductions will reduce your taxable income by accounting for expenses you’ve incurred so if you are not taking advantage of them, then you need to start. The IRS offers many ways to reduce your taxable income, thus putting more back into the bank.

Although some of these are a no brainer, you don’t want to miss one. So make sure you note those that apply to you.

1. The Standard Deduction

Even if you don’t have a lot of itemized deductions on your return, you still qualify for a standard deduction for 2015. This is based off of your income. Here’s a list of standard deductions based off income and how you plan to file:

Standard Deduction for Individual Taxpayers
Your Income Your Tax Due
$0 — $9,225 10% of your taxable income
$9,226 — $37,450 $922.50 + 15% of the amount over $9,225
$37,451 — $90,750 $5,156.25 + 25% of the amount over $37,450
$90,751 — 189,300 $18,481.25 + 28% of the amount over $90,750
$189,301 — $411,500 $46,075.25 + 33% of the amount over $189,300
$411,501 — $413,200 $119,401.25 + 35% of the amount over $411,500
$413,201 and more $119,996.25 + 39.6% of the amount over $413,200
Data from Forbes.com.

 

Married Filing Joint Return or Surviving Spouse
Your Income Your Tax Due
$0 — $18,450 10% of your taxable income
$18,451 — $74,900 $1,845 + 15% of the amount over $18,450
$74,901 — $151,200 $10,312.50 + 25% of the amount over $74,900
$151,201 — $230,450 $29,387.50 + 28% of the amount over $151,200
$230,451 — $411,500 $51,577.50 + 33% of the amount over $230,450
$411,501 — $464,850 $111,324 + 35% of the amount over $411,500
$464,850 and more $129,996.50 + 39.6% of the amount over $464,850
Data gathered from Forbes.com.

 

Head of Household
Your Income Your Tax Due
$0 — $18,450 10% of your taxable income
$13,151 — $50,200 $1,315 + 15% of the amount over $13,150
$50,201 — $129,600 $6,872.50 + 25% of the amount over $50,200
$129,601 — $209,850 $26,772.50 + 28% of the amount over $129,600
$209,851 — $411,500 $49,192.50 + 33% of the amount over $209,850
$411,501 — $439,000 $115,737 + 35% of the amount over $411,500
$439,001 and more $125,362 + 39.6% of the amount over $439,000
Data gathered from Forbes.com.

 

Married But Filing Separately
Your Income Your Tax Due
$0 — $18,450 10% of your taxable income
$9,226 — $37,450 $922.50 + 15% of the amount over $9,225
$37,451 — $75,600 $5,156.25 + 25% of the amount over $37,450
$75,601 — $115,225 $14,693.75 + 28% of the amount over $75,600
$115,226 — $205,750 $25,788.75 + 33% of the amount over $115,225
$205,751 — $232,425 $55,662 + 35% of the amount over $205,750
$232,426 and more $64,998.25 + 39.6% of the amount over $232,425
Data gathered from Forbes.com.

 

Trusts and Estates
Your Income Your Tax Due
$0 — $2,500 15% of taxable income
$2,501 — $5,900 $375 + 25% of the amount over $2,500
$5,901 — $9,050 $1,225 + 28% of the amount over $5,900
$9,051 — $12,300 $2,107 + 33% of the amount over $9,050
$12,301 and more $3,179.50 + 39.6% of the amount over $12,300
Data gathered from Forbes.com.

2. Mortgage Insurance Premiums Deduction

For those that have obtained their mortgage insurance policy in 2007 or later, you still might qualify for a deduction on the amount you’ve paid toward your mortgage insurance premium. Just know that as of mid-December, lawmakers haven’t extended the expiration date on this provision, according to The Motley Fool. So if this measure isn’t extended, then you won’t be able to deduct the amount you’ve put toward your mortgage insurance premium.

3. Tuition and Fees Deduction

It does not matter if you take the standard deduction or if  you itemize, you can deduct up to $4,000 in qualifying tuition and fees paid for yourself, your spouse or any dependent in 2015. These expenses must be for higher education. Don’t get confused and try to place private school or preschool tuition here. If you are married but filing separately or if another person can claim an exemption for you as a dependent, then you don’t qualify for the tuition and fees deduction.

4. State and Local Sales Tax

Most people have the option of deducting either your state and local income taxes or state and local general sales taxes paid. If you live in a non-income taxing state, you can deduct state and local sales taxes paid.

5. All Cash Donations

If you itemize your deductions, you can then deduct cash donations to IRS-approved charities. It’s important you know which charities you can donate too. You also must have written record of your donation in order to deduct cash gifts, no matter the amount.

A qualifying written record can be a copy of the bank record, a statement from the organization or a payroll deduction record. So if you made a $100 donation, make sure you can fully document the gift.

6. Non-Cash Donations

If you itemize, you can claim the fair market value (FMV) of donated clothing, household items and stock. Fair market value is the price you otherwise could have sold the items at. If you plan to donate your car, make sure you are donating to a qualified charity, such as a 501(c)(3). This section would include donations to charities like the Salvation Army.

7. Donating Your Time and Talents

You can deduct certain expenses for charity work. An example would be the cost of gas and oil if you use your car to get to and from the place you volunteer. If you don’t want to calculate the value per mile you can deduct, a standard mileage rate of 14 cents per mile is acceptable.

It’s important to check the list. Even work with The Boy Scouts is recognized as charity work.

You can also deduct the cost of purchasing and maintaining uniforms you wear to hospitals where you volunteer for instance.

8. Student Loan Interest Deduction

Even if you don’t itemize your deductions, you can deduct up to $2,500 in qualified student loan interest paid in 2015. You do not qualify for this deduction if your gross-adjusted income is more than $80,000, or $160,000 for married couples filing jointly.

9. Job Search Expenses

If you itemize, you can deduct expenses incurred while searching for a job in the same line of work as your current or most recent job. It’s important to note that it needs to be in the same line or similar to jobs when using this. Expenses you can deduct include:

  • Transportation, which includes a deduction of 56 cents per mile, parking, tolls and cab fees
  • Preparing, printing and mailing out your resume
  • Phone expenses
  • Ad placement
  • Fees related to job searches
  • Employment agency fees

10. Moving Expenses

If you meet the IRS distance and time tests and moved for a new job, then you can qualify for a moving expense deduction. The qualified expenses include the cost of moving your belongings and travel to your new home. The standard mileage rate is 23 cents per mile.

You can also deduct the cost of lodging for yourself and household members within reason. No penthouse stays just because you are traveling cross country for a new gig.

11. Military Reservist Travel Expenses

If you travel more than 100 miles from home for service, you can subtract travel expenses from the income you report on your tax return. Qualifying expenses include transportation, meals and lodging while traveling to and from service base.

12. Medical and Dental Expenses

You can deduct medical and dental expenses for you, your spouse and your dependents after your total medical expenses exceed 10 percent of your adjusted gross income (AGI).

This can work in situations where you have a lot of out of pocket expenses. If you or your spouse is age 65 or older, you can deduct total medical expenses that exceed 7.5 percent of your AGI.

13. Tax Preparation Fees

Whether you did your own taxes or paid someone to do them, you can include the fees on your miscellaneous tax deductions list. Costs can include tax return preparation and electronic filing fees. Most people forget the electronic filing fees.

14. Mortgage Interest Deduction

If you itemize, you can deduct the interest paid on your mortgage. You can also deduct interest paid on loans totaling $1 million or less. If you’re married and file separately, you can only deduct on loans totaling up to $500,000.

15. Mortgage Points

Don’t forget points. If you itemize, you can immediately deduct the points you paid to purchase or build your primary home.

16. Home Renovation Deduction

Most often, home renovation costs are not deductible on your tax return. Simply deciding to put in a new bathroom is not going to qualify this deduction. On the other hand if you make improvements to your home for medical purposes, like adding or expanding an entrance and adding wheelchair ramps for accessibility purposes, then you can deduct these renovations as medical expenses. If you are not sure if you have a renovation expense that qualifies, it’s best to ask a professional.

If these renovations increase the value of your home just know that they cannot be claimed as medical-related expenses, according to TurboTax.

17. State, Local and Foreign Taxes

Certain taxes imposed on you can be claimed as an itemized deduction on your tax return. Including state and local sales tax, you can also deduct:

  • State and local personal property taxes
  • State, local and foreign real estate taxes
  • State, local and foreign income taxes

18. Business Use of Your Home

This is another tricky deduction but it can be taken. You can deduct certain expenses for using a part of your home for business purposes. To qualify for this deduction, you must use part of your home for one of the following in the tax year:

  • As the primary location for trade or business
  • As the primary location for meeting and tending patients or clients
  • As a storage facility for inventory or product samples for your business or trade
  • If you have a separate, unattached structure on your property, it must be used exclusively for your business or trade (no doubling up as a craft studio and a place that you run your writing business from)
  • For rental use
  • As a daycare facility

19. Business Use of Your Car

If you use your car for your job or business, you might be able to deduct the costs incurred for business use. You can either use a standard mileage rate of 54 cents per mile or the actual expense method.

20. Business Travel Expenses

You might be able to deduct certain unreimbursed business expenses incurred while traveling for work. Costs could include transportation, baggage fees, meals, lodging and laundry. Any expenses that are considered extravagant or lavish do not qualify for the business travel expenses deduction. So if you are traveling and go to the Opera…that is not a deduction.

21. Educational Expenses

Under the American Opportunity Tax Credit, which was extended through December 2017, you can deduct up to $2,500 per student. With this tax credit you can deduct college-related expenses, such as the cost of course materials. Note that this is for higher education and not private school or homeschooling expenses.

22. Employee Business Expenses

If you itemize, some local transportation costs are deductible, as well as certain business entertainment and gift expenses. Keep record of your expenses as proof for what you want to deduct so it is clear what the deduction was for.

23. Appraisal Fees

If you donated any property in 2015 include all appraisal fees you paid on your miscellaneous tax deductible items.

24. Fees to Collect Interest and Dividends

Fees paid to a broker, bank, trustee or similar agent to collect taxable bond interest or dividends on shares of stock (but not stocks, bonds or securities) are deductible. Generally you should get a statement about this but if not, ask for one.

25. Hobby Expenses

This is one of those expenses that no on really understands. When it comes to Hobby Expenses you can deduct ordinary and necessary expenses incurred from a hobby. Unlike a business, a hobby is specifically not meant to make a profit. If you suffer losses due to a hobby, you cannot deduct the loss from your income. So if your hobby is creating drones and you crash and trash one, you might be able to take this as a loss.

26. Investment Fees and Expenses

Certain fees that you pay to manage your investments can qualify as a miscellaneous deduction. Here are the fees and expenses you can deduct:

  • Fees for any investment counseling
  • Custodial fees, if paid for outside of the account
  • Software or online services used to manage investments
  • Safety deposit box rental fees
  • Any transportation costs to and from an advisor’s office
  • Attorney costs used to collect taxable income
  • Costs to replace lost security certificates

27. IRA Losses

Any losses on traditional and Roth IRAs can be claimed as a miscellaneous itemized deduction if all the amounts in your accounts have been distributed to you and the total distributions are less than your unrecovered basis. Again if you are not sure if you qualify for these, seek professional assessment.

28. Repayment of Income

If you had to repay income that you included in ordinary income in a prior year, you may be able to deduct this repaid amount. Normally, you can only claim a deduction for repayment of income if your repayment qualifies as an expense or loss you had at your business, trade or in a transaction.

29. Legal Fees

If you itemize, you can deduct legal fees related to doing or keeping your job, collecting taxable alimony, or tax advice. You cannot deduct fees you paid to defend against charges that rose from participating in a political campaign. You’ll need to have the fees shown in a letter from the law offices.

30. Safety Deposit Box Rental Fees

You can deduct safety deposit box fees paid for storing taxable income-producing stocks, bonds and investment-related documents. You’ll need a copy of the fees, showing that they have been paid to claim this.

31. Gambling Losses

For gamblers, you might be able to recoup some of your losses. Winnings from gambling is taxable and must be reported. If you suffered gambling losses, you can deduct up to the amount of gambling income you reported. Claim your losses as a miscellaneous deduction. Sorry a weekend of loss in Vegas might not qualify.

32. Casualty, Disaster and Theft Losses

Losses related to your home, household items and vehicles not covered by insurance or reimbursed could be deductible. If you suffered damage from a tornado for instance, you might be able qualify. This is why it is a great idea to photograph items in your home and store the file so you can show proof of ownership.

33. Educator Expenses

K-12 educators can deduct up to $250 for any unreimbursed expenses for books, supplies, computer equipment and other supplementary materials. To qualify, you must work at least 900 hours in a school year. This deduction works for teachers, teacher’s aides, private kindergarten teachers and those that supervise after school programs.

34. Health Savings Account Contributions

Health Savings Accounts (HSAs) are tax-exempt accounts used to pay or reimburse certain medical expenses. As a benefit of HSAs, you can claim a tax deduction on contributions you or another individual made to your HSA.

35. Alimony

If you paid alimony to a former spouse in 2015 as part of a divorce or separate maintenance decree, you can deduct how much you paid. Your payments qualify as alimony if:

  • You and your spouse or former spouse do not file jointly
  • You paid with cash, check or money order
  • Your payment went to your spouse or former spouse
  • In the case of being legally separated, you do not live in the same household as your former spouse
  • Your payment is not for child support or property settlement

36. Self-Employed Health Insurance

Is health insurance tax deductible for the self-employed? Absolutely. If you were self-employed in 2015, you can deduct premiums paid for medical and dental insurance, as well as qualified long-term care insurance for yourself, your spouse and your dependents.

37. Penalty for Early Withdrawal of Savings

If you withdrew your money early from a certificate of deposit or similar bank investment, the penalty you pay could qualify among deductions for taxes.

38. IRA Contributions

Although IRS itemized deductions do not allow Roth IRA contributions, you might be able to claim the amount you put toward a traditional IRA. Get a deduction for up to $5,500 contributed to a traditional IRA in 2015. If you’re age 50 or over, you can contribute up to $6,500.

39. Personal Exemptions and Dependents

For personal exemptions and dependents, you can deduct up to $4,000 for 2015, an increase from the 2014 limit of $3,950.

40. State Balance Due

If you owed additional taxes on a prior year’s state return and paid them in 2015, you might be able to deduct the taxes paid. So if you had a balance, make sure you take time to double check this.

41. 401k Tax Deduction

Although there is no 401k tax deduction you’ll include when you file your taxes for 2015, just by making contributions you reduce your taxable income. That’s because your pretax contributions are deducted from your taxable income when your employer issues your W-2 form.

42. Dependent Care Flex Spending Account

A Dependent Care Flexible Spending Account (FSA) lets you set aside pretax money for expenses related to caring for a child, a disabled spouse, parent or other mentally or physically handicapped dependent. You are allowed to contribute up to $5,000 pretax dollars toward a Dependent Care FSA. The amount you contribute will not be taxed on your tax return.

43. Union Dues

Among the numerous tax write-offs for 2015, union dues and expenses are included in this type of deduction. You can deduct initiation fees and dues you pay for membership in a union. Normally these will show up in a box on your 1099 or your W-2.

44. Work Uniforms

If your employer requires you to wear clothes that are not suitable for ordinary wear (like scrubs for nurses), you can claim them as a deduction. Common items deducted include theater costumes and safety gear. Note that suits do not qualify for your list of itemized deductions. Under this you can also count special shoes and protective vests (think security).

45. Senior Tax Deduction

If you were age 65 by the end of 2015, you are eligible for an additional standard deduction.

46. Car Registration Fees

You might be able to include vehicle registration fees on your 2015 tax deductions, if you meet certain requirements.

47. Jury Duty Pay

If you gave your jury pay to your employer because they paid your salary while you served on the jury, you could deduct your jury pay from your taxable income.

48. Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a commonly overlooked tax credit for low- to moderate-income individuals. Although it is not considered an IRS deduction, the EITC is a refundable tax credit meant to supplement income. The amount you receive will range from $503 to $6,242

49. Bad Debt Deduction

If you lent money that was never repaid, you have bad debt. To deduct bad debt, you must prove that you loaned out cash or you have previously included the amount in your income, according to the IRS. You must also show that you attempted to collect the debt and that there is no chance the debt will ever be collected. So if you loan money, for this reason it is good to have a contract with written terms and a copy of all collection letters sent.

50. Home Sale

If you sold your home at a profit, you can exclude up to $250,000 ($500,000 for married filing jointly) of gains from your income.

Did you see any deductions that were new to you?

Share this post