It’s your money, don’t miss out on it
We’re coming to the end of tax time once again… and for those of us who do our own taxes that means zeroing in on every tax deduction possible. At this point in my life I don’t have many out of the ordinary deductions, which makes filing easier from year to year.
The tax deductions I frequently claim include:
- Donations to charity
- Mortgage interest
- Property taxes
- Student loan interest
In fact, these four main deductions account for 97% of all our deductions combined! That said, regardless of the amounts every deduction is important, worth finding, and worth using.
In the spirit of hunting for every possible deduction I wanted to bring to your attention an awesome article resource I found while poking around on the TurboTax website entitled ‘The 11 Most Overlooked Tax Deductions.’
TurboTax list of 11 commonly missed deductions
Use this brief list to get ideas and follow the links to read about each one in greater detail.
- State sales taxes – useful for those living in states with no income tax. {read more}
- Reinvested dividends – easy to miss if you automatically reinvest your mutual fund dividends.
- Out-of-pocket charitable contributions – be sure to include mileage and other lesser considered contributions to charitable organizations.
- Student loan interest paid by Mom and Dad – the IRS now treats this as a gift to children.
- Moving expense to take first job – fresh out of college? move more than 50 miles away? this deduction is for you.
- Property tax deduction for non-itemizers – extended to 2009 for those who take the standard deduction but still pay property taxes.
- Child care credit – useful if your child care costs exceeded your tax-favored reimbursement account at work.
- Earned Income Tax Credit – a substantial credit for low-to-moderate income workers that is very frequently missed.
- State tax you paid last spring – you are eligible if you owed state income taxes after filing last years return.
- Refinancing points – points from refinancing can be deducted equally each year for the entire life of the mortgage.
- Jury pay paid to employer – make sure you do not pay taxes on jury fees you must turn over to your employer.
Some of these are deductions while some are actually credits. Some can be quite substantial while others tend to be small. Regardless of the size or type… if you can reduce the amount of tax you owe then you would be a fool not to do so. Hopefully this article will help a few DFA readers keep more of their hard earned money where it belongs… in their own pockets!
Did this article remind you of any missed deductions?
Before reading these tips I had forgotten about a donation of cash and mileage to the Salvation Army – topic #3 above helped remind me to claim it!
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{ 13 comments… read them below or add one }
Matt,
I don’t know how many military readers you have, but some state / counties offer tax exemptions for military members who were deployed last year. I haven’t been able to find a consolidated list of all areas that offer this, but anyone who is a home owner and deployed may want to look into this.
Kita
Thanks Lakita!
You should set up a Paypal account on your blog for people to “Buy Matt a coffee for all the help he gives me”
Charge em like 3$ and use the money to go towards debt.
* Of course I get a 10 percent commission as it is my idea.
Thanks for this. I didn’t know you could deduct mortgage points.
I found the list very useful and am glad to provide it here.
holly – points on purchase are fully deductible. Points on the refi are taken over the life of the loan. If the loan is paid off early, and you are good with your records, you take the remaining amount in the year that loan is paid off, whether it’s due to a sale or another refinance.
Joe
As always Joe, thanks for your knowing, and sharing the details.
We use a CPA, but I love lists like this so I can see if she found all the deductions possible (so far, she’s golden). Thanks for the list!
I must admit my laziness led me to claim no tax breaks on my last taxes… I fully intend to do everything I can next year!
#6.Property tax deduction for non-itemizers is a big one. Those with a mortgage, but opt to take the standard deduction rather than itemize the mortage interest deduction, often forget that you can still deduct property taxes. Too bad it probably goes away in tax year 2010.
Nice list and always helpful this time of year. It’s not something we tend to think about until now. Our blog just listed much of the same, but we also included links directly to the IRS site where each topic is discussed in case you’d like to read the info first hand.
Hi Matt, I was surprised to see state income taxes as not on the list of the top 4 – that’s really surprising! I would have expected these taxes to outperform charitable deductions, since I understand the average giving in the U.S. is between 1-2%, whereas I think the average state income tax is much higher.
Hey Fred, yeah state income taxes are definitely something we should not forget to file, but I do not think they are commonly missed… do you?
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