Tax Deductions People Tend To Overlook

Tax Deductions

A lot of people overlook deductions at tax time. Deductions can come in handy, so you shouldn’t overlook them. With that said, here are a few deductions many people overlook.

1. State Income Tax Or Sales Tax- You can deduct your state’s sales tax or state income tax, but there are some states that don’t even have income tax. However, many people in states that don’t have state income taxes don’t do a good job at keeping records of purchases they made. Also, many people don’t even know they have options like these.

2. Refinancing A Mortgage- You may not know this, but you can Refinancing A Mortgagededuct 100% of the points you paid on your mortgage during the year you bought it. If you refinance, then you can still take a deduction, but it is spread out over the loan’s term. This means you can deduct 1/10th of points you paid for each of the next 10 years, if you have taken out a 10 year mortgage.

3. Child/Dependent Care Credit- Many people know about claiming the child tax credit. However, many don’t know they can Child Dependent Care Credit deduct child and dependent care expenses, but those expenses must qualify for a deduction. The max credit is $6,000, so make sure to find out if you qualify for this credit.

4. Moving Expenses Related To A New Job- If you moved more than 50 miles in order to work at a new job, then you can make a deduction. In fact, if you moved yourself, then you can deduct 23 cents per mile. Don’t worry if you took a standard deduction because you should still be able to take this deduction, and you can deduct parking fees and tolls if you used your own vehicle to make the move.

5. Jury Compensation- Some companies offer paid leave to their employees when they have jury duty. However, sometimes they ask their employees to pay any jury fees they were paid. The IRS considers this to be taxable income, unless you deduct fees that you gave to your company.

6. Educator Expenses- You have to be eligible for this and you need to be a teacher. If eligible, then you can deduct up to 2% of Educator Expenses your adjusted gross income on various expenses. Some of these expenses include lab fees, books and transportation costs.

7. SE Taxes- This is short for self-employment taxes, and those who are self-employed need to pay 100% of their medicare taxes and social security taxes. You’ll pay 15.3% of your taxable income. The good news is you can deduct half of your SE taxes on your tax return.

Tax time is creeping up. This is why you should know about the different deductions. Now you know about the different deductions that people overlook, and you may be able to take some of those deductions.