commonly overlooked tax deductions & credits

Commonly Overlooked Tax Deductions &

CreditsBy: John J. Bowman, Jr.

Job-Hunting Costs• If you spend time this year looking for a job (not your

first job) then many of the expenses incurred while job-hunting can be deducted, including:

• Transportation expenses: 56 cents a mile for driving plus parking and tolls as well as cab fares

• Food and lodging expenses• Employment agency fees• Cost of printing resumes, business cards, postage, and

advertising

New Job? Moving Expensive• To qualify for a moving expense deduction you must have

moved at least 50 miles away from your old home. • You can deduct the cost of moving yourself and your

household goods to the new location. Some of the eligible deductions include:

• 23.5 cents per mile while driving your own car• Parking and tolls• Lodging

• You are eligible for this deduction even if you do not itemize.

Sales Taxes• You have the option to deduct sales taxes or state

taxes off your federal income tax. • The sales tax deduction is especially important if you

live in a state that does not impose a state income tax.

• However, even if you pay state taxes, the sales tax break may be the better deal if you made larger purchases such as a engagement ring or car.

• This will require doing an itemized deduction.

Child-Care• You are eligible for a tax credit worth between 20%

and 35% of what you pay for child care while you work. A tax credit is even better than a deduction!

• It is also legal to list the cost of a babysitter as a charitable contribution on your tax return, if you can document that you were volunteering while the babysitter was performing their duties.

Energy-Saving Home Improvements

• If you install qualified residential alternative energy equipment you are eligible for a credit of up to 30% of the total cost of such systems installed through 2016.

• This can include things such as a solar hot water heater, geothermal heat pump, and wind turbines.

Lifetime Learning Credit• The Lifetime Learning credit can provide up to

$2,000 per year• You are eligible to take off 20% of the first $10,000

you spend for education after high school in an effort to give yourself new or improved skills.

• While this deduction phases out at higher income levels, it does not discriminate based on ones age.

Health Insurance Premiums• In some cases, insurance premiums from medical

expenses can be deducted from your taxes.• Medical expenses usually need to exceed 7.5% of your

adjusted gross income in order to be deducted.• However, if you are self-employed and responsible for

your own health insurance cover then you can actually deduct 100% of your premium cost.

• This will be taken off your adjusted gross income as opposed to an itemized deduction.

Self-employed Social Security

• If you are self-employed and forced to pay the full 15.4% Social Security tax on your own, then you can write off half of what you pay.

• This deduction can be found on the face of the 1040 form, therefore, you do not need to itemize to take advantage of this deduction.

Out-of-Pocket Charitable Deductions

• You can write off out-of-pocket expenses incurred while doing charity work.

• If you make food for a soup kitchen or fundraiser, you can deduct the cost of ingredients used to make the food.

• It is important to save the receipts or itemize the costs in case you are audited.