We all know about the common deductions claimed on income tax forms. Things like number of dependents, miles driven for work, and office supplies are all fairly common; but every year thousands of people leave off valuable deductions that could increase their tax return. In this article we’ll be covering some commonly missed deductions you could potentially use on this year’s return.
Medical Insurance Expense
Health insurance expenses are going up, especially if you’re self employed. Depending on how much assistance your job provides, you could be paying over 10% of your Adjusted Gross Income (AGI) to insurance premiums. Medical expenses that are over 7.5% of your AGI can be claimed as an itemized deduction; and self employed filers can sometimes claim 100% of their insurance premiums.
No, I’m not talking about the big donations you make and get a receipt for. I’m talking about the small contributions that often slip through the cracks. Did you drive your vehicle for the charitable event? For every mile deduct 14 cents. Did you purchase items that were used for the charity? Itemize the costs or keep receipts. Not only will this save you money on taxes, it will be good to have if you’re ever audited.
Home Office Deduction
Many small business owners have an office in their home or living space. This office can be used as a tax deduction if it meets certain requirements. The office must be used exclusively for work; meaning that it can’t be used as a part-time bedroom or playroom. The office must also be your primary location for business. You can still operate from other locations, but this room must be where your business primarily functions. If your office meets these requirements you could be eligible for a deduction.
Student Loan Interest
Student loans can heavily impact income and the IRS understands this. If you fall under the 22% tax bracket and pay student loans, you can deduct up to $2,500 from your taxable income. If your income falls within the 22% tax bracket, the maximum return you can receive from deducting student loan interest is $550. Get the most from your student loan payments by asking your tax professional what deductions you qualify for.
Lifetime Learning Deduction
The American Opportunity Act allows for adults to benefit from continuing their education. This act allows for the first $2,000 spent on tuition and other school expenses to be deducted. This does not include transportation costs or living expenses. If you spend more than $2,000, the act also allows further deductions. 25% of your next $2,000 spent on education can also be deducted, bringing the total to $2,500.
These are only a few of the deductions that people frequently miss when filing their returns. Having a local expert help with filing taxes gives you peace of mind knowing your deductions will be accounted for. We help clients every year get the most from their returns and we would love the opportunity to work with you. Contact us today to set up your consultation.