Millions of taxpayers overpay each year by skipping over these money-savers
Each year, the IRS releases a list of the most common mistakes people make on their returns. The “oops” that occurs most often is forgetting to write down one’s Social Security number, but the most costly mistake is overlooking these tax deductions. Millions of taxpayers overpay each year by skipping over these money-savers.
STATE SALES TAX
Congress offers you the option of deducting the state sales tax paid or the state income taxes paid. You pick the one that grants you the largest deduction, and if you live in a state without an income tax, the winner is an easy choice.
In some cases, even filers who do pay state income taxes can benefit with the sales tax choice.
The IRS produced tables that detail how much residents of various states can deduct according to their income and local and state sales tax rates, but they are not the last word. If you bought a big-ticket item like a boat, vehicle or airplane, you can add the sales tax you paid to the amount shown on the IRS table. Even homebuilding materials can be added.
It is easy to overlook these add-ons, but they could make for a great deal if you choose the sales tax deduction and live in a state with an income tax.
OUT-OF-POCKET CHARITABLE CONTRIBUTIONS
It is hard to forget big charitable gifts you donated throughout the year, but the little things also count, come April. You can write off out-of-pocket costs you spent while volunteering for a charity, including the ingredients for dishes you make for a soup kitchen or stamps you buy for a fundraising project. You can even deduct 14 cents per mile that you drove for a charitable purpose. You can deduct these costs if your contribution totals more than $250 and you kept your receipts.
These commonly-missed deductions can really add up:
- Transportation expenses to doctors’ offices or medical facilities
- Health insurance premiums
- Nursing home medical expenses
- Hearing aids, contact lenses and eyeglasses
- Equipment for disabled individuals
- Nurses’ fees
- Weight-loss programs prescribed by a doctor
- Alcohol and drug abuse program costs
Look out for these oft-overlooked deductions that involve your business or work:
- Education expenses to improve or maintain your job skills
- Home office expenses
- Job-related newspapers or professional journals
- Union dues
- Required uniforms
- Cleaning and laundering services while traveling for business
- Cell phones required for business
What deductions are you using this year to save money on taxes? Share some we may have forgotten in the comments below!