Commonly Overlooked Deductions
Tax Deductions can help lower your tax liabilities. Most tax payers know that they can deduct mortgage interests and real estate taxes for their home. However, there are many other deductions that may not be as common but can help reduce the tax payers' liabilities.
- Below are some commonly overlooked tax deductions:
Moving Expenses
- If you take a new job and moved, you may be eligible to claim moving expenses.
- Inorder to claim the moving expense deduction, you must meet two requirements: distance and work time. For the distance requirement: the new job location must be at least 50 miles farther from your former home than your old job was. For the work time requirement: you must be a full-time employee of the new job for at least 39 weeks during the 12 months following the move.
Job Searches
In today's changing economy, changing jobs is very common. In general, unreimbursed expenses incurred in seeking new employment are deductible if you look for a job in the same field and at the same level even if you don't get the job.
- Deductible expenses include:
- Employment agency fees
- Cost of preparing and mailing resumes
- Travel and transportation costs for job search
Charitable Contributions
Charitable contributions can be in two categories: cash or non-cash. Cash contributions to a qualified charitable organizations can include check or credit cards. Non-cash items can range from used clothing in good condition to cars or boats. You must have receipts for all donations from the charity, noting the items donated as well as their fair market value. With non-cash contributions over $500, Form 1098-C – Contributions of Motor Vehicles, Boats, and Airplanes, issued by the charitable organization must be attached to the tax return. Also, Section A of Form 8283 must be completed on your tax return.
Casualty or Theft Losses
Casualty is defined as the complete or partial destruction of property resulting from an identifiable event of a sudden, unexpected, or unusual nature. The casualty must be due to an external cause, not a defect in the product itself. Theft is defined as the unlawful taking of property.
- Some examples of casualty and theft losses are described below (this is not an all-inclusive list):
- Damage from a hurricane, tornado, earthquake, tidal wave, volcanic eruption, flood, storm, fire, or sonic boom
- Damage from an accident, if it was not caused by a willful act or willful negligence on the part of the taxpayer
- A loss from vandalism or theft
- Damage or loss from a terrorist attack
Student Loan Interest Deduction
Up to $2500 of qualified student loan interest may be deducted. The proceeds of the loan must have been used exclusively to pay qualified higher education expenses at an eligible educational institution for an eligible student. An eligible student, for the purpose of this deduction, is generally a degree candidate carrying at least a half-time course load. The student may be the taxpayer, his/her spouse, or a dependent claimed in the year the education was furnished. The student loan interest can be deducted only by the person who is obligated to pay the loan.
Work-Related Educational Expense
The cost of education to maintain or improve the skills required by your current job, or to meet the requirements of the law or the employer for maintaining your present salary or position, is deductible. This is true even if you receive a degree through your course of study.
The expenses are not deductible if the education is required to meet the minimun requirements of the job or if the education qualifies you for a new trade or business.
Tax Preparation Fees
Tax preparation fees is a miscellaneous itemized deduction. The fees paid to MercuryTax Service to prepare and/or electronically file your tax return(s) are deductible in the next year's tax return. For the current year, if you paid someone to prepare your previous year's return or you purchased tax preparation software and publications, those costs are deductible.
Tax Resources
