Ten most overlooked tax deductions

By Yazhou Sun, In Business Editor

Spending nearly a fraction of the time required to comb through America’s complex tax policies is consuming, so we week to help with a list of the most over-looked (and a bit wacky) tax deductions, according to Yahoo Finance.

1) Alcoholism and drug abuse treatment

There are ways to claim the cost of drug and alcohol rehab on your tax return- as long as you itemize your deduction on Schedule A. In fact, any medical and dental cost is deductible in the same way, as long as it exceeds more than 7.5 percent of your adjusted gross income of the year. Just don’t let this enable your bad habits.

2) Cleaning and laundering services when traveling

Why didn’t I know about this policy before? Those hotels were ripping me off!

3) Costs associated with looking for a new job in your present occupation

This includes fees for résumé preparation and employment of outplacement agencies. Keep track of your job-search expenses… or reconstruct them. If you’re looking for a position in the same line of work, you can deduct job-hunting costs as miscellaneous expanses if you itemize. But beware: job-hunting expenses incurred while looking for your first job don’t qualify for deduction.

4) Education expenses to the extent required by law or your employer or needed to maintain or improve your skills

Need to attend a program in London required by your company? No problem. Just itemize the expanses and you could get your tax deducted.

5) Mortgage prepayment penalties and late fees

Although the landlords probably wouldn’t be happy about your behavior, you could still get the tax return for the late fees. Be careful though, it might give you a bad reputation.

6) Subscriptions to professional journals

How can you keep up with developments affecting your job and profession in such an information-overloaded world? Journals, newsletters, magazines and online subscription sites help to provide crucial information for your work, the cost of which is deductible. This applies to print as well as online versions. But remember, the subscriptions must be an ordinary and necessary expense of your job or profession.

7) Moving expenses

As mentioned above, job-hunting expenses incurred while looking for your first job are not deductible. But, moving expenses to get to that position are. To qualify for the deduction, your first job must be at least 50 miles away from your old home. If you qualify, you can deduct the cost of getting yourself and your household goods to the new area.

8) Out-of-Pocket charitable deductions

You can write off out-of-pocket costs incurred while doing work for a charity. For example, it’s hard to overlook the big charitable gifts you made during the year, by check or payroll deduction, ingredients for casseroles you prepare for a nonprofit organization’s soup kitchen and stamps you buy for your school’s fundraising mailing count as a charitable contribution. Keep your receipts and if your contribution totals more than $250, you’ll need an acknowledgement from the charity documenting the services you provided.

9) Student loan interest paid by Mom and Dad

Generally, you can only deduct mortgage or student-loan interest if you are legally required to repay the debt. But if parents pay back a child’s student loan, the IRS treats it as though the money was given to the child, who then paid the debt. So, a child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student-loan interest paid by mom and dad. And he or she doesn’t have to itemize to use this money-saver.

10) Credit for energy-saving home improvements

Although this credit has been scaled back, it still exists and might save you some money if you made energy-saving home improvements during 2012. The credit is worth 10 percent of the cost of qualifying energy savers including new windows and insulation. There’s also no dollar limit on the separate credit for homeowners who install qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. Your credit can be 30 percent of the total cost (including labor) of such systems installed through 2016.

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