Income Tax Deductions – Don’t Overlook These
We all hate paying income taxes, but one of the nice things about our tax laws is that they do allow us to pay only on our net income, rather than the gross. That makes for an interesting game, as taxpayers are then put in a situation where they can actually benefit from taking time to find income tax deductions that they can apply to their gross income in order to reduce their taxes.
What few people realize is that the US Tax Code has an incredible number of things in it that the average taxpayer could be taking in the form of income tax deductions if they only knew about them. The problem, of course, is that there’s really no readily available list of income tax deductions that people can look over in order to decide if they might be useful to them specifically.
We recently talked about the most common income tax deductions taken by American taxpayers. That’s helpful, but also obvious, and most everyone knows about those. This time, we’re going to talk about some of the infrequently used income tax deductions that are obscure enough that you might not know about them. If that’s the case, you’ll want to look over the list as it might reduce your taxes by a few dollars.
Seldom-Used Income Tax Deductions
Jury duty – Many employers will continue to pay their employees who are asked to perform jury duty. That’s nice, but some of these employers ask their employees to turn over their jury duty pay to them in exchange for receiving their regular pay. If you handed over your jury duty pay to your employer, you may take it as as an income tax deduction.
Laundry Expenses – If you travel on business, and you need to spend money for laundry or dry cleaning, those expenses are tax deductible. This would apply to either someone taking the occasional business trip, such as a salesman, or someone who travels all the time, such as a long-haul truck driver. These income tax deductions only apply, of course, if you are not reimbursed for them by your employer.
Union Dues – Union membership is way down in the United States over the past few decades, but if you do belong to a union and you regularly pay dues as a member, you may deduct that sum from your income taxes.
Uniforms – Most of us work in regular clothes, but some people have jobs that require specialized clothing or protective gear. If you are required to wear uniforms or protective clothing at work but are not compensated for them by your employer, you may take the costs as income tax deductions.
Journals and Magazines – If your line of work requires that you subscribe to ezines, magazines, or trade journals so that you can keep up with the latest news and developments in your industry, you may take the cost of those subscriptions as income tax deductions. This would apply to software, as well.
Disasters – Losses from disasters that are sudden and unexpected can qualify as income tax deductions. Some things qualify and some do not, and as always, context may matter. Check with the IRS or your tax preparer for full details regarding whether these income tax deductions may apply to you.
Home Improvements Prior to Sale – Selling a house? Been told by a realtor that you’ll get a lot more for it if you repaint or replace the carpet? These expenses qualify as income tax deductions since they effectively add to the cost of the home prior to your sale. There are lots of real estate-related income tax deductions that are permissible, so if you’re buying or selling a home, check to see which income tax deductions apply to you.
Eye or Hearing Devices – If you’re hard of hearing or have vision problems and your glass, contact lenses or hearing aids are not covered by your health insurance, you may deduct the costs of acquiring these items as income tax deductions.
Contraceptives – If your health insurance doesn’t cover contraception, then you may take the costs as income tax deductions. This applies only to prescription contraceptives; over the counter products are not deductible.
Save Deposit Boxes – If you store investment documents in a safe deposit box at your bank or credit union, the fees qualify as income tax deductions. This doesn’t apply to safe deposit boxes used for other purposes, such as storing negatives of your cat photos. Sorry.
Financial Advice – Did you get lucky and win the lottery? If so, and you wisely hired a financial advisor to prevent you from investing all of your money in a yak farm, you’ll find that the costs of the advisor qualify as income tax deductions. That’s an added bonus on top of the fact that your advisor likely gave you good advice, thus justifying the expense in the first place.
Income Tax Preparation Fees – If you purchased income tax preparation software or hired a professional tax preparer to handle your taxes, the costs qualify as income tax deductions. This is a nice incentive for doing business with a professional. The fees allowed as income tax deductions are those that applied to last year’s filing.
Income Tax Deductions Summary
These are but a handful of things that might apply to a number of taxpayers that are often overlooked at tax time. There are countless others, and honestly, there probably isn’t anyone who could accurately guess within 10 percent just how many allowable income tax deductions the IRS permits. It’s a lot, and many are obscure, and some will only apply to a small number of people, but they all count towards reducing your taxable income, and that means they all have equal weight.
It’s worth taking the time to find out about as many income tax deductions as you possibly can, as they all add up. The more you can use, the lower your net income and thus, the lower your tax bill. It might be a headache to do, but it pays off in the end in cold, hard cash and that makes it worthwhile.
Want to learn more? Click here to find out how to maximize your income tax deductions