Tax time is right around the corner whether or not you are prepared for it.
We all know a few people who are never prepared for tax time. But even if you feel like you have prepared for tax season, you might not be as ready as you think.
The truth is that there are tons of tax deductions you might qualify for. With so many, it can be hard to keep track of all of them. To help you out and make sure you save as much money as possible, here are at 11 tax deductions you might be overlooking.
1. Moving Expenses
When you relocate because of your job, you might be able toclaim those costs as a deduction when you file your taxes. Of course, you must meet certain qualifications.
2. Student Loan Interest
You can deduct the interest you paid for your student loans, or the interest student loans of any dependents. There is a cap of $2,500 and you have to have an adjusted gross income of $80,000 or less to qualify for some of this tax deduction.
3. Membership Dues
If you pay membership dues that help you conduct your business, you might be able to deduct them. Once again, you must meet certain guidelines to qualify for this deduction.
4. Home Office Space
If you spend anyamount of time working from home, you could qualify for a tax deduction even if you have a traditional job and work at an office part of the time too. A portion of your real estate taxes and your mortgage may be claimed as a deduction. But, before you claim this deduction, make sure the office space at your home qualifies. It must be a dedicated office and not an office-slash-something-else.
5. Job Hunting Costs
Did you have to look for a new job this year? If so, some of those expenses might be used as a deduction to reduce your tax liability for the year. The new job must be in the same line of work you were in before in order to take advantage of this tax deduction, and there are other criteria to meet as well.
6. Internet & Phone Charges
Running a business might qualify you for a tax deduction on at least a portion of your internet and phone charges.
7. Work Related Educational Expenses
If maintaining your current job means you have certain educational requirements you must meet, you might be able to deduct those expenses from what you will owe in taxes for the year.
8. Tax Preparation Expenses
Paying to have your taxes done last year means you can deduct that expense from your taxes for this year if you meet the proper criteria.
9. Health Insurance for the Self Employed
Self employed people usually have to pay a very high fee to have health insurance. However, the good news is that you may be able to deduct some of these costs from your taxes and reduce your overall tax liability.
10. Business Books and Subscriptions
Some books and subscription you might have for business purposes might be tax deductible, but be sure to save your receipts for these purchases.
11. Excess Social Security Taxes
When you work for more than one employer, they do not co-ordinate on the social security taxes withheld from your paychecks. This means you could be paying too much if your combined gross income exceeds a certain amount. Any overage can be claimed as a tax credit.
These are just some of the tax deductions and a credits you might be overlooking. Although they may seem small, they can add up to save you a bundle on your taxes this year. So, even if you do feel like you are prepared for the upcoming tax season, check into the deductions you could be missing out on before you send in your return.
Have you ever used any of these tax deductions? What other tax deductions have you used in the past?
Table of Contents
7. Work Related Educational Expenses
8. Tax Preparation Expenses
9. Health Insurance for the Self Employed
10. Business Books and Subscriptions
11. Excess Social Security Taxes
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FAQs
Gambling losses up to your winnings. Interest on the money you borrow to buy an investment. Casualty and theft losses on income-producing property. Federal estate tax on income from certain inherited items, such as IRAs and retirement benefits.
What are some examples of deductions you might have to pay? ›
Deductions subtracted from your gross income to calculate your adjusted gross income are known as “Above-the-line” deductions.
- Retirement contributions and Traditional IRA deductions. ...
- Student loan interest deduction. ...
- Self-employment expenses. ...
- Home office tax deductions. ...
- HSA contributions. ...
- Alimony paid. ...
- Educator expenses.
What should I put for my tax deductions? ›
You can deduct these expenses whether you take the standard deduction or itemize:
- Alimony payments.
- Business use of your car.
- Business use of your home.
- Money you put in an IRA.
- Money you put in health savings accounts.
- Penalties on early withdrawals from savings.
- Student loan interest.
- Teacher expenses.
What are some deductions you may see on your paycheck stub? ›
These deductions may include tax withholdings (FITW and SITW), tax payments (FICA, Medicare, etc.), debt collections and allotments. Knowing where your money is going is just as important as knowing how much is being deposited in your savings or checking account.
What deduction can I claim without receipts? ›
What does the IRS allow you to deduct (or “write off”) without receipts?
- Self-employment taxes. ...
- Home office expenses. ...
- Self-employed health insurance premiums. ...
- Self-employed retirement plan contributions. ...
- Vehicle expenses. ...
- Cell phone expenses.
What is the best tax write-off? ›
22 popular tax deductions and tax breaks
- Saver's credit. ...
- Health savings account contributions deduction. ...
- Self-employment expenses deduction. ...
- Home office deduction. ...
- Educator expenses deduction. ...
- Solar tax credit. ...
- Energy efficient home improvement tax credit. ...
- Electric vehicle tax credit.
What deductions can you itemize? ›
Itemized deductions are expenses the taxpayer incurred, such as mortgage interest, state or local income taxes, property taxes, medical or dental expenses, or charitable donations.
What qualifies as a tax deduction? ›
A tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state and local taxes paid, mortgage interest, and charitable contributions.
Can you write off gas on taxes? ›
If you're claiming actual expenses, things like gas, oil, repairs, insurance, registration fees, lease payments, depreciation, bridge and tunnel tolls, and parking can all be deducted." Just make sure to keep a detailed log and all receipts, he advises, and keep track of your yearly mileage and then deduct the ...
Can you write off a car payment? ›
Only those who are self-employed or own a business and use a vehicle for business purposes may claim a tax deduction for car loan interest. If you are an employee of someone else's business, you cannot claim this deduction.
Car insurance premiums may be tax deductible if you're self-employed and do business-related driving. You can file an IRS Form 1040 or IRS Form 2106 to write off car insurance on your taxes.
What are standard deductions on taxes? ›
The standard deduction is a specific dollar amount that reduces the amount of taxable income. The standard deduction consists of the sum of the basic standard deduction and any additional standard deduction amounts for age and/or blindness. In general, the IRS adjusts the standard deduction each year for inflation.
What are some possible deductions from your paycheck? ›
These withholdings constitute the difference between gross pay and net pay and may include:
- Income tax.
- Social security tax.
- 401(k) contributions.
- Wage garnishments. ...
- Child support payments.
What type of deductions are optional? ›
Voluntary deductions are amounts which an employee has elected to have subtracted from gross pay. Examples are group life insurance, healthcare and/or other benefit deductions, Credit Union deductions, etc.
What deduction are you most likely to see on your pay stub? ›
Common pay stub deductions include federal and state income tax, as well as Social Security. These federal and state withholdings account for much of the difference between your gross income and net income. There may be other deductions as well, depending on the programs that you sign up for with your employer.
What is a write-off example? ›
Write-off is an extreme variant of a write-down. This happens when the book value of an asset is below its fair value. For example, if damaged equipment is partially usable, it can be written down or if a debt is partially paid off by the debtor, it will again be partially written down.
What qualifies as a tax write-off? ›
To qualify for a write-off, the IRS uses the terms "ordinary" and "necessary;" that is, an expense must be regarded as necessary and appropriate to the operation of your type of business. Generally, tax write-offs fit into specific reporting categories such as business travel, advertising, or home office expenses.
What is a bad debt write-off? ›
A bad debt write-off is the process of removing an uncollectible debt from a business's accounting records. This accounting method acknowledges the loss incurred when a debtor fails to repay a debt.
What are goodwill write-offs? ›
Unlike other assets that have a discernible useful life, goodwill is not amortized or depreciated but is instead periodically tested for goodwill impairment. If the goodwill is thought to be impaired, the value of goodwill must be written off, reducing the company's earnings.