10 Tax Deductions You Probably Forgot
A number of tax deductions are out there that many taxpayers seem to forget about because they are so uncommon. This is especially true for those deductions that are hidden within the itemized section since many taxpayers opt for standard deductions on their returns.
But knowing about them and claiming them could significantly reduce your taxable income. So before you start preparing your 2009 tax return, it’s good to see if you qualify for one of the following tax deductions.
If you’re a constant giver, you should not forget to take advantage of the tax deductions available to those who give to charity. (like those who gave to Haiti) Typically, you qualify if you give donations of cash and property to qualified non-profit organizations. However, in order for the donations to be deductible, you must keep records of your contributions. This is especially true of any gifts that add up to more than $250.
This deduction is available to homeowners who are paying interest on their mortgage every year. This is definitely one you don’t want to miss because it offers the opportunity to reduce your taxable income based on how much you’ve paid out in interest on your home loan.
Even though this deduction is not itemized, it is one many people don’t notice because they have no idea about it.
Basically, it allows people in certain professions to deduct their job-related expenses. These professions include those in the performing arts like music, dancing and acting.
Did you know that you could possible claim a deduction simply for searching for a job? These expenses could be deducted even if you do not get the new job. However, if you are looking for a job in a new occupation, there was a substantial break between the ending of your last job or you’re looking for a job for the first time, you cannot deduct these expenses. (See tips for preparing for a layoff)
If you contributed money to your employer and that contribution was unreimbursed then you may be able to deducted the expenses. Examples of these expenses may include business liability insurance premiums, laboratory breakage fees, dues to professional societies, tools and supplies used in your work, union dues and expenses, work clothes and uniforms, work-related education and travel, transportation, meals, entertainment, gifts and local lodging related to work.
If you pay rent on a safe deposit box and keep taxable-income producing stocks, bonds or other investment-related papers and documents in it, you may be able to take a deduction.
However, you cannot deduct your rent if you use the box for jewelry or other personal items.
Since you must report the full amount of your gambling winners for the year, you can also deduct your gambling losses for the year. However, you cannot deduct losses that exceed the amount of your winnings. In order to take this deduction, you must keep an accurate diary of your winnings and losses. You may deduct losses when gambling on slot machines, table games, bingo, racing, lottery and more.
A few deductions are available that you might forget about because they only last for a short while. Some include the following:
- Sales tax deduction: The sales deduction falls into the itemized deduction category (claimed on Schedule A) and is only available for the 2005 through 2009 tax returns. Unless this deduction is extended, it will go away for the 2010 tax year.
- Vehicle sales tax deduction: This deduction is only available for the 2009 tax year. It is offered to individuals who purchase a new vehicle. They can deduct sales tax or excise taxes, even if they don’t itemize. The deduction is available on the first $49,500 for the purchase of a vehicle and phases out at an adjusted gross income of $125,000 ($250,000 for joint filers). (Read more about vehicle sales tax in 2009)
- Mortgage insurance premium tax deduction: This itemized deduction is only available from 2007 to 2010. To qualify, your insurance policy must be for home acquisition debt on a first or second home.
There are a number of additional deductions to take advantage of if you qualify. To look at the full list of what you can and cannot deduct on your tax return, visit the IRS website.