Preparing your taxes can be quite a tiring and trying task. Income taxes takes away a pretty large chunk of your gross yearly income, and add to that the increasing cost of living and the rate of inflation, you are left scrounging around to make ends meet. Nobody likes to do their taxes but sometimes the returns check can be quite a surprise and a welcome one at that.
Moreover, would it not be nice if you had to pay lower taxes. Some people generally tend to forget or include a number of tax deductions when they are preparing to file. If taken into account all these little known deduction, you might end up saving a large portion of the money you pay as taxes.
Travel expense deductions
Although you cannot include family vacations into your tax file as deductible items, but you can include a fairly large range of travelling expenses as a part of your deductions. For example, unreimbursed business traveling costs and costs incurred in the line of volunteer work. Moreover, you can include further deductions as medical expenses if it exceeds 7.5 percent of your adjusted gross income and would also included the money you spent on traveling to and from the doctor.
Health insurance premiums
Since health insurance premium is deemed to be an ‘out of pocket’ medical expenditure, if it totals and exceeds 7.5 percent of your adjusted gross income, anything above that can be used as a tax deduction. It is imperative that you keep an eye on these expenses and you would be pleasantly surprised when you see them adding up to a large deduction.
In case you invest in the market and the IRS considers you to be an investor, any and all expenses incurred in the course of investing your capital can be considered to be a tax write off. Broker’s fees, paperwork and consultation fees, cost of maintaining accounts and boxes related to investments and even the money you spend on buying investment advice magazines and the fuel you spend driving to the broker is considered to be tax deductible.
Tax deductions for working parents
Working couples with children under the age of 13 are eligible to get tax deductions to the tune of $3000 for a single child and $6000 for multiple children. These tax deductions come in the form of nanny and childcare costs. The deductable is again a function of your gross adjusted income which is limited to 20 to 30 percent up to the limits mentioned above.
Homeowner’s tax credit
Although this cannot be technically classified as a deduction, it just means that you have to pay less out of your pocket. Homeowner’s tax credit is available to first time home buyers but there are smaller tax credit opportunities for other home buyers as well. There is also a deduction for single filers up to a limit of $500 and $1000 for joint married filers.