There are plenty of tax deductions that people often forget to utilize when they file their returns. If we believe the annual reports published by IRS, the most common mistake that people make is in entering their social security number – they either forget to enter it at all or enter wrong digits. This example is a proof that when it comes to making mistakes, the opportunities out there are almost unlimited. The fewer mistakes you make, the higher amount of money you can save in taxes. So, here you go; following is a list of forty-five most common deductions that are often overlooked.
You can take the home mortgage interest deduction for one second home in addition to your primary home but you must itemize deductions. A boat is considered a second home for federal tax purposes if it has a head (bathroom) a bed (sleeping berth) and a galley (kitchen). You’ll need IRS Form 1098 to deduct the interest and also any points paid to secure a loan.
1. Worthless securities or stock
2. Those tools of business or trade that have a life of less than twelve months
3. Losses caused by embezzlement and theft
4. You can also obtain tax deductions on the amount of money spent in subscribing professional journals
5. Personal property taxes on boats and automobiles by state
6. The expenses and cost associated with any special equipment used by a disabled individual
7. Seller-paid points when a home is purchased
8. 50% of the amount of money paid as self-employment tax
9. Taxes associated with real estate transactions, such as when a property is sold or purchased
10. The cost of protective clothes that you require at work
11. Points on certain types of refinancing, such as on a home mortgage
12. The money spent on personal liability insurance that is paid by an employee for wrongful acts
13. The amount of penalty paid when you withdraw money from a saving account early
14. Self employed individuals can also get tax deductions on certain part of premiums paid on a health insurance policy
15. The money spent on charitable activities; all such out-of-pocket expenses are tax deductible. This includes standard mileage deduction.
16. Late fees and other penalty charges paid on prepayment of a mortgage loan
17. The cost of medical transportation while you are away from home is also tax deductible. This includes all lodging expenses and standard mileage deduction incurred for certain medical reasons.
18. Any amount of money you spend as part of legal fees in order to collect or obtain alimony payments
19. Expenses incurred on legal abortion
20. The money spent on lead paint removal
21. The administration fees charged by an IRA trustee, especially when the charges are billed separately
22. The amount of money you pay as investment advisory fees
23. The money spent in connection with home improvements is also one of the most common tax deductions that are often overlooked.
24. For a disabled person, apart from their disability tax credit, impairment-related work expenses are also tax deductible.
25. Hospital services fees that may include surgery, nursing services, therapy, and laboratory work
26. Foster child care expenses
27. The amount of money paid as foreign taxes
28. If you have paid certain amount of fees for childbirth preparation classes, especially when the classes are about obstetrical care, you can get that amount deducted when you file tax returns.
29. Many people use a safe deposit box to hold investment. Any fee that is paid to utilize this service is also tax deductible.
30. Expenses incurred when an employee moves from one place to another
31. The amount of money they contribute to a state disability fund.
32. One of the most common tax deductions that are often overlooked is the cost of education, especially when you get enrolled for certain professional courses to improve or maintain your skills and qualifications. All such education expenses to the extent required by your employer or by law are tax deductible.
33. Dues paid to labor unions
34. Depreciation in the value of your home computers
35. Any amount of money that you spend while you are looking for a new job in the same occupation. The deductions in this regard may include the cost associated with the services of outplacement agencies and resume preparation.
36. When you buy a contraceptive with a doctor’s prescription, these expenses are also tax deductible.
37. The cost and expenses associated with the purchase, repair, or maintenance of hearing devices, blue eye glasses, and contact lenses
38. Closing costs or commission paid when you sell a property
39. The amount of money spent during traveling for laundering and cleaning services also come under tax deductions.
40. The cost and expenses associated with cellular telephones.
41. Theft or casualty losses
42. If you have donated a property to a charitable organization, the appreciation in the value of that property is also tax deductible.
43. Any appraisal fees that you pay for casualty losses or for charitable donations
44. Amortization of the amount of premium that you pay on taxable bonds
45. Any expenses incurred in connection with drug abuse or alcoholism treatment
Besides that, if you have paid certain amount of money to professionals as part of accounting fees for IRS audits or tax preparation services, those expenses also come under tax deductions.