5 BIG Overlooked Tax Deductions
Tax season is upon us and you might be asking what can you still do that can potentially reduce your overall tax liability. Here are 5 BIG overlooked tax deductions that people often don’t ask about or overlook come tax time.
1. Charitable Mileage
Most taxpayers are very good at keeping receipts of their cash donations that they make to the organizations they donate to during the course of the year. One of the deductions few taxpayers pay attention to is the charitable mileage deduction. Don’t forget fees and tolls as well. Consider the amount of time that you give gratuitously during the course of the year for your religious organizations, charitable causes you support, or possibly coaching one of your kid’s teams.
2. Non-Cash Charitable Contributions
Most taxpayers literally get a blank receipt from the Salvation Army, Goodwill, or some other charitable organization and then tell their accountants that they donated a bag or two for $50. What a huge mistake!! The reason you have the blank receipt is to itemize everything you give away line by line to maximize the legitimate deduction.
You can review the Salvation Army’s list of low and high value per item here, but you need to really examine the true fair market value of each item. Make sure you have good documentation and receipts to back up your claims.
3. Form 2106 (Unreimbursed Employee Expenses)
If you look at the number at the bottom of page one of your personal tax return you will see an amount called your adjusted gross income. This is an important number because it sets the bar on other potential deductions you can take.
Since employers today are reimbursing less and less employee expenses, you should keep very close track of your unreimbursed employee expenses. You must make sure the expenses are for ordinary and necessary items that help you carry on your normal trade. You can see an entire list of possible deductions in Publication 529 here. This could be a big one come year end.
4. Job Changing Expenses
Did you spend money this year for a job search in your current occupation? If so, you may be able to deduct employment and outplacement agency fees, costs to mail and prepare resumes, and even travel expenses. There are specific rules about this if on the IRS website, and these expenses may be deductible on your itemized deductions section on Schedule A of your tax return. Definitely consult your tax preparer on this one.
5. Home Office Deduction
It has been discussed often that taking this deduction would surely raise a red flag with the IRS, so maybe you shouldn’t do it. Actually, if your home office is a) your regular place of business and b) the space in your home is used regularly and exclusively for your business, you could be entitled to a deduction.
The IRS recently introduced a simplified home office deduction option for $5 a square foot to a maximum of 300 square feet to make this process much simpler.
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