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Often Missed Tax Deductible Items
Tax return preparation is very difficult for most people even if you are going to a trained professional like my self. Often deductions are missed simply because the taxpayer has not thought of them and the tax preparer has not asked. Here is a list of the most commonly missed tax deductible items.
1. Miles driven for medical related incidences are deductible as an itemized deduction. The rate is $.20 for 2007 and $.19 for 2008. Miles are totaled for doctor visits and hospital visits. Start adding them up and you will be amazed. Think about it on a weekly or monthly basis and then multiply by 52 or 12 respectively.
2. Most know that mortgage interest is deductible but did you know the interest you pay on a 2nd home is also deductible? Savvy tax payers will include their motor home in this deduction if it has a working bathroom and kitchen.
3. Charitable deductions are made and often forgotten about. Sometime we just cannot remember the box of cookies we bought from our neighbor's daughter who is with girls scouts as well as many other donations throughout the year. Add them upyou will not be sorry.
4. Expenses incurred during a move that is job related are a tax deductible item. Ask your tax preparer about this one as there are certain tests to be satisfied. If you qualify include expenses for transportation and storage of household goods. Also travel including lodging from your old home to your new home is deductible.
5. Deducting alimony can provide an annual tax reduction of $3,360 per year assuming $1,000 paid per month and you are in a 28% tax bracket. Do not pass this one up as the alimony is also taxable to your ex.
6. Interest paid on student loans is deductible. Many times after graduation you take a new job and your address changes. The year end statement showing the amount of interest paid for the calendar year gets misplaced. Therefore, if you paid student loan interest or have a child that did do not pass this tax deductible item up.
7. Taxes withheld from your paycheck that have been sent on to your state on your behalf by your employer are deductible. Also if you owed your state for taxes from the year before that you paid during the current tax year do not forget this tax deductible item.
8. Loans made to family and friends who have failed to repay you are deductible as worthless debts on Schedule D. You are limited to $3,000 per year until the full loss is taken. But if you have capital gains then the whole loss can be taken up to the amount of the capital gain plus $3,000.
9. Losses from business endeavors will be covered in other articles but for the present let me just say do not be timid to take losses on line 12 of your 1040 which arise from self employment. If your venture was intended to turn a profit then you should be taking the deduction.
10. Rental income from a family member is usually unreported because we want to beat the system. First this is illegal but second you are missing out on a very large tax deductible item.
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