We are not in a position in which we have nothing to work with. We already have capacities, talents, direction, missions, callings.
– Abraham Maslow
We’re getting closer and closer to D-Day (April 15th: “Done Day”) around here, and we’ve already had quite a tax season. This truly is our favorite time of year–we get to sit down with our friends and help them discover that the dread they were expecting when all was said and done…well, it wasn’t as bad as they feared!
We love the look on clients’ faces when they find out they have a refund waiting for them… though they expected to pay. Or, when they discover that the bill wasn’t nearly as bad as feared. And, of course, we mostly enjoy the face-to-face interaction with folks with whom we’ve been mostly interacting by phone or email.
So, if you’ve been putting it off…please don’t delay! Good things are in store for you when you “get ‘er done!”
This week, I wanted to make sure you knew about deductions which we routinely “discover” during these face-to-face sessions. I won’t be revealing any “trade secrets” here–but they’re common enough that even the best software can let you down (unsurprisingly).
Read on, and leave your feedback!
“Real World” Personal Strategy
Don’t Miss These 6 Commonly-Missed Deductions
Putting together this list may run slightly counter to my business goals–after all, we do get paid to do this on behalf of clients! That said, our mission is to ensure that EVERYONE in our area saves the most possible when the IRS comes calling! Some of these may seem small, but trust me when I say that they add up.
So, before you file those taxes, make sure you’ve considered…
1. Beyond Charitable Gifts
Most everyone remembers to count the monetary gifts they make to charities. But do NOT forget that expenses incurred while doing charitable work can be deducted effectively.
You can’t deduct the value of your time spent volunteering, but if you buy supplies for a group, the cost for the goods is deductible. Or, if you wear a uniform while volunteering (for example as a hospital volunteer or youth group leader), the costs of that apparel and any cleaning bills also can be counted as charitable donations.
So can the use of your vehicle for charitable purposes, such as delivering meals to the homebound in your community or taking the Scout troop on an outing. The IRS will let you deduct that travel at 14 cents per mile.
2. Certain Job-Hunting Costs
Yes, college students cannot deduct the costs of hunting for that new job across the country… but already-employed workers can! Most costs associated with looking for a new job (in your present occupation), including fees for resume preparation and employment of outplacement agencies, are deductible — as long as you itemize. The trick, as with other itemized expenses, is that these costs (along with other misc. deductions) must exceed 2 percent of your adjusted gross income before they produce any tax savings. But the phone calls, employment agency fees and resume printing costs might be enough to get you over that income threshold.
3. Summertime Day Camp, Dependent Care
Millions of working parents know to claim the Child and Dependent Care Credit. But some parents overlook claiming the tax credit for child care costs during the summer. This tax break applies to summer day camp costs! The key here is that the camp is a day-only getaway that supervises the child while the parents work. Unfortunately, you can’t claim overnight camp costs (too bad, for camp directors!).
Remember, also, this can be for children AND other dependents. If you have an adult dependent who needs care so that you can work, those expenses can be claimed under this tax credit.
4. Deductible medical costs
Many taxpayers don’t even shoot for these, because of the 7.5 percent of adjusted gross income threshold required before you can claim any medical expenses. However, it’s easier to clear that hurdle if you don’t overlook “miscellaneous” medical costs. Some of these include: travel expenses to and from medical treatments, insurance premiums you pay for from already-taxed income and even alcohol or drug abuse treatments.
Further, self-employed taxpayers who are not covered by any other employer-paid plan (like one carried by a spouse), can deduct every cent of health insurance premiums as well, “above the line” on the 1040 form!
5. Retirement tax savings–more than just the IRA
There’s a credit called “The Retirement Savings Contribution Credit” which was created to give moderate- and low-income taxpayers an incentive to save. When you contribute to a retirement account, either an IRA (traditional or Roth) or a workplace plan, you can get a tax credit for up to 50 percent of the first $2,000 you put into such accounts. This means you get a $1,000 credit–much sweeter than a simple deduction!
6. “Green” home improvements
Whatever your opinion of “climate change”, the tax code has an opinion–and it wants you to agree to the tune of paying you! You can now claim a possible credit of up to $1,500. This covers such relatively simple things as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
While some of these may seem like “pocket change”…just a few minutes of effort can pay a nice hourly rate! And, better in YOUR pockets than in Uncle Sam’s, right?
So, I hope this helps.