The 20 Most Overlooked Tax Deductions- Part One

It’s January again and you know what THAT means. It’s almost tax time again. Most people will probably agree that this has not been the most lucrative of years. People from all walks of life have suffered great financial losses this year while trying to survive beneath a crumbling economy. So it’s no surprise that taxes are the last thing anyone is interested in talking about now. But what if talking about taxes now could you some money in a couple months, or even help increases the size of your refund? You’d start talking.

How about talking about deductions? It’s always best to be aware of deductions you plan on taking through out the year, so that you can make sure you are keeping track of the necessary items to help you claim your deduction. Though you should have a CPA that is already aware of all the deductions that are available, they may not always be aware that some of those deductions might be available to you.

So it’s up to you to stay informed, and keep your tax person in the know. Here’s a list of twenty tax deductions that you may be overlooking.

• The depreciation of your cell phone (or computer). That’s right if you use your cell phone for “the convenience of your job” you can deduct the depreciation value.
• Medical Expenses. You can deduct the cost of most additional medical expenses you accrue during the year that aren’t covered by your insurance. That includes hearing devices, eye-care (glasses & contacts), contraceptives (by prescription), not to mention travel expenses related to medical care, and even childbirth classes. Special bonus if you’re self-employed, you can deduct 60% of your health insurance premium!
• Childcare tax credit. If you have kids, chances are your tax person will get this in automatically, but you want to make sure. Now, even if you have a reimbursement account for child care services at work, you can still take advantage up to $6,000 (for two or more children). You could be talking about cutting your tax bill here, don’t miss it!
• College tuition. You, yourself, or any dependant, are eligible to deduct up to $4,000 in college tuition fees.
• Student loan interest paid by mom and dad. Until recently you could only deduct student loan interest if you were liable for the debt and actually paying it yourself. Now if mom and dad are paying back the loan, the IRS treats as if it’s a gift. So if your not claimed as a dependant you can go ahead and deduct up to $2500. Thanks mom!
• State tax paid. Did you owe on your state tax last year? Well get it back! The IRS allows you to deduct what you paid to the state last year. Of course you can’t deduct the fees and penalties…
• Home business expenses. The items that can be claimed for deduction here are numerous and depend exactly on the business. A daycare for instance can deduct portions of grocery, mortgage, rent, arts & craft supplies and utility bills. A freelance web designer on the other hand can deduct paper, toner, and computer software. The IRS has an extensive section on home-based business deductions, but you should always go over, in detail, with your tax person what it is you do for a living. The best rule of thumb, keep track of everything you use for business!
• Job-hunting. Just because you found yourself unemployed this year, doesn’t mean the IRS doesn’t allow you a little something. Any expenses you accrue while searching for a job are fair game.
• Moving expenses for a new job. If the job you find is more than 50 miles away, you can deduct the cost of moving your household there.
• Alcohol and drug recovery. Amy Winehouse says No, No, No, but the IRS says yes, yes, yes, to deducting expenses related to rehab and recovery efforts.

We’ll give you a chance to digest this first batch of deductions before divulging the second set of ten. And of course by digest, we mean start collecting receipts and what not… Be sure and subscribe to the Ntroduction blog, become a fan on facebook, or follow us on twitter so that you catch part two of this series.