Top 10 Overlooked Tax Deductible Items
July 29, 2008
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. The medical mileage deduction for 2007 is $.20 per mile and $.19 per mile for 2008. Trips from home to the doctor and the hospital are included when calculating total miles for the calendar year. Sometimes a client does not know off hand how many miles this actually is but when you start adding them up it can create a very large deduction.
2. Interest paid on a 2nd mortgage is deductible as long as the residence has a function kitchen and bathroom. Have you ever considered your motor home in this hidden tax deductible item?
3. Deducting charitable donations may be undesired by some because of the biblical adage “Do not let your right hand know what your left hand is doing.” However I tell my clients that the government rewards us for being benevolent so add up you contributions. Include donations to Deseret Industries as well as vehicles donated to various foundations.
4. Moving expenses incurred for a job related move are a tax deductible item. There are certain tests to qualify for this deduction so be sure to consult your tax advisor. Deductions include transportation and storage of household goods. Travel including lodging from your old home to your new home is deductible.
5. Alimony is deductible by the payer and reportable by the recipient. Do not pass this up as this can take a little pain away from the amount being paid each month to the ex. If you are in a 28% tax bracket and the alimony amount is $1000.00 per month then the annual tax reduction is $3,360.
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. Most of us know that we can deduct our real estate taxes on our home but did you also know the state income taxes withheld from your W-2 are also deductible. Also the state income taxes paid during the year for a prior year should be included as a deduction.
8. You can create a capital loss on your individual tax return by deducting worthless debts. These are loans you have made to family and friends that have not been repaid. Capital losses go nicely against capital gains
9. Did you dabble in any kind of business on the side? Be sure to add up all the expenses and at least let your tax preparer know about your effort to enter the self employment arena so he can help you include all the deductions you entitled to.
10. When a family member moves into another home you own often you will forget to report it. The incentive to reporting is that this is a tax deductible item. You can usually create a loss to be reported on your 1040 when these deductions are properly accounted for.
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