Are you unsure about what tax deductions you can take? Many people feel that figuring out which deductions to take requires too much effort or worry about their eligibility for certain deductions. However, if you have been working with a Fee-Only financial planner, you should have an idea of what to expect.
One of the advantages of working with a financial planner is that you have an expert who has insight into your financial situation can make certain that you are applying for all of the tax deductions that apply to you.
In “The Most-Overlooked Tax Deductions,” Yahoo! Finance revealed that “Years ago, the fellow who ran the IRS at the time told Kiplinger’s Personal Finance magazine that he figured millions of taxpayers overpay their taxes every year…” because of deductions they didn’t take. Here are just a few of the deductions you may be missing:
Out-of pocket expenses for charity: You may include donations in your deductions but forget that “you can write off out-of-pocket costs incurred while doing work for a charity.” These kinds of expenses include things like food or stamps purchased to help schools and nonprofits. There is a per-mile deduction each year and you can also deduct for parking fees and tolls you paid while doing charity work.
Families paying for college: As long as your parents don’t claim you as a dependent, you can deduct some of the student loan interest your parents paid on your behalf. To the IRS, this is money your parents gave you and your parents can’t claim the deduction since the loans are your responsibility.
Also, unlike the Hope Credit (which helped during the first two years of college), the American Opportunity Credit applies for all four years of college for those who meet income requirements.
Deductions for the self-employed: If you qualify for Medicare and are self-employed you can deduct for certain premiums paid as long as you don’t qualify for coverage under an employer (yours or your spouse’s).
If you are self-employed and travel for business, you can include airline baggage fees with your travel expenses.