These Tax Deductions Could Save You Money!
Many Americans overpay their taxes every year simply because they don’t take tax deductions that are available to them.
These are not complicated loopholes or things only apply to the wealthy. These are tax deductions that anyone itemizing their return can take if they are eligible for the specific deduction. There are literally dozens of them.
Here is just one of the overlooked tax deductions that can pay off big if you take the time to use it.
State Sales Taxes
After years of uncertainty, in 2015 Congress finally made this break “permanent.” This is particularly important to you if you live in a state that does not impose a state income tax. Congress offers itemizers the choice between deducting the state income taxes or state sales taxes they paid. You choose whichever saves you the most money. So if your state doesn’t have an income tax, the sales tax write-off is clearly the way to go.
In some cases, even filers who pay state income taxes can come out ahead with the sales tax choice. And, you don’t need a wheelbarrow full of receipts. The IRS has tables that show how much residents of various states can deduct, based on their income and state and local sales tax rates. But the tables aren’t the last word. If you purchased a vehicle, boat or airplane, you may add the sales tax you paid on that big-ticket item to the amount shown in the IRS table for your state. The IRS even has a calculator that shows how much residents of various states can deduct, based on their income and state and local sales tax rates.
We put those quotations marks around permanent above because, as Congress takes up tax reform in 2017, one possibility is the elimination of both the sales tax and the state income tax deductions. But you’re still sure to have the choice for your 2016 return. – Kiplinger
More Everyday Tax Deductions That You Could Be Missing
There are too many tax deductions available to cover in this one article, but here are several more that could help you reduce your tax burden and fatten your wallet.
Get out your pencil and calculator and start reducing your tax bill!
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. If you or your spouse is 65 or older, you can deduct total medical expenses that exceed 7.5 percent of your AGI.
If you meet the IRS distance and time tests after you relocate for a new job, you can take a moving-expense deduction. Qualified expenses include the cost of moving your belongings and traveling to your new home, and the standard rate is 19 cents per mile. You can also deduct the cost of lodging, but not meals, for yourself and other household members.
MORTGAGE INSURANCE PREMIUMS DEDUCTION
If you obtained a mortgage insurance policy in 2007 or later, you might qualify for a deduction on the amount you’ve paid toward the premiums. As part of the Protecting Americans from Tax Hikes Act, qualified mortgage insurance will be treated as tax-deductible interest through the end of 2016.
HOME RENOVATION DEDUCTION
Typically, home renovation costs are not deductible on your tax return. If you make improvements to your home for medical purposes, however — such as adding entrance-and-exit wheelchair ramps or lowering cabinets for better accessibility — you can deduct those renovations as medical expenses. If the renovations are made to increase the value of your home, however, you can’t claim them as medical-related expenses. – Go Banking Rates
Do you believe there are tax deductions you are missing?