10 Tax Deductions You Had No Idea Even Existed
Ignorance isn’t always bliss, especially when it comes to money. Many taxpayers are eligible for certain tax deductions, but as the IRS doesn’t like to publicize them too much, most people never claim what they’re entitled to. If you’d rather have your cash in hand than sat in the IRS’ bank account, make sure you find all the deductions available and claim them. Here are 10 tax deductions you might not know existed to get you started.
1. Tax Deduction for Charity Donations
As MSN notes, if you’re a constant giver, don’t miss taking advantage of the very generous tax deduction to those who make charitable donations. As a general rule, you’ll qualify if you donate cash or property to qualified non-profit organizations, to a maximum amount of 60% of your adjusted gross income. Just bear in mind that if you want to claim the maximum amount of deduction you’re owed, you’ll need to keep an itemized record of your contributions, particularly in the case of donations that exceed $250. If you don’t want to bother itemizing, you can still deduct up to the standard $300 in charitable donations.
2. Home Mortgage Interest Tax Deduction
According to Yahoo, the Home Mortgage Interest Tax Deduction is available to homeowners who are paying interest on their mortgage every year, up to $750,000 in principal. As it offers the chance to reduce your taxable income based on how much you’ve paid in interest on your mortgage, it’s one that homeowners definitely won’t want to miss.
3. Weight Loss Expenses
If your doctor has told you that your health is in serious jeopardy because of your physical condition, don’t despair just yet. According to Turbotax, there might be a silver lining to their diagnosis, a silver lining that comes in the shape of a tax deduction against just about any remedy designed to help you drop a few pounds, lower your cholesterol, improve your heart rate or anything else your doctor cares to sign off on. Membership fees for weight-loss groups such as Jenny Craig and Weight Watchers can all be deuced, as can the costs for any separate meetings the group holds that aren’t included in the standard membership fee. If your doctor recommends intense weight control supervision, the costs of FDA-approved weight-loss drugs, bariatric surgery, behavioral counseling, nutritionists, and physician and hospital-based programs are also deducible. You can’t, however, deduct the cost of diet food or beverages (under the assumption that these are a substitute for your normal diet, rather than an addition), nor the cost of gym, health club, or spa membership.
4. Kids’ Summer Camp
As FastForward Accounting says, if you’re a parent of a child below the age of 13, you’re probably already aware that you can claim a credit for the money you spend on childcare while you’re at work. What you might not realize is that the deduction also applies to summer camp costs.
5. Certain Animal Expenses
Most people are already aware that the visually and hearing impaired can deduct the expenses for purchasing, training, and caring for a service animal. What’s less well-publicized is the fact that owners of emotional support animals can do the same. Providing you can prove that the animal was purchased with the primary purpose of assisting with a specific mental illness or disorder, you can deduct the expenses. You can also claim any unreimbursed out-of-pocket expenses for food, medicine, veterinarian care, crates, and garbage bags if you foster a cat or dog.
6. Qualified Performing Artists Deduction
If you work in the performing arts, whether that’s in music, dancing or acting, you may qualify for a tax deduction against job-related expenses that aren’t reimbursable by your employer. To qualify for the deduction, you’ll need to have worked as a performing artist for at least two employers; the amount of the deduction must be in excess of 10% of any gross income earned by those performances; and your adjusted gross income, not counting this exception, shouldn’t exceed $16000.
7. Smoking Cessation
If you’re struggling to muster the willpower to quit your cigarette habit once and for all, the IRS might have just what you need to strengthen your resolve. Participation in a smoking cessation program is considered a medical tax deduction. Over-the-counter medications like nicotine patches and gum aren’t considered a deductible expense, but prescription drugs used to ease nicotine withdrawal and participation in programs are.
8. Gambling Losses
No one likes to lose, but if Lady Luck’s turned against you, don’t give up all those dollars you threw her way as a lost cause just yet. While any winnings from gambling are taxable and have to be reported, losses can be claimed as a deduction up to the amount of your reported winnings. The losses can be related to gambling on slot machines, table games, bingo, racing, lottery, and more. You’ll need to show proof of your losses in order to claim the deduction – if you’re a loyal casino gambler and used your player card, the casino should be able to give you a report of both of your winnings and losses to save you from having to keep track.
9. Home Renovation for Medical Purposes
If you decide to renovate your home just for the sake of it, don’t bank on getting any nice surprises when you make your tax return. If, on the other hand, you made the improvements for medical purposes (eg, making a bathroom handicap assessable, widening doors for wheelchair access, adding entrance and exit wheelchair ramps, etc) you can deduct the cost of those renovations as medical expenses. Just be warned that if any of those renovations have added to the value of your home, you won’t be able to claim them as a deduction.
10. Volunteer Work
Karma isn’t the only one who rewards good deeds. Although they don’t like to brag about it, the IRS likes to reward volunteers by offering them the opportunity to deduct certain expenses relating to their charity work. This includes the cost of gas if you drive to and from the place you volunteer (you can calculate the value per mile if you want, but most people find it easier to deduct the standard rate of 14 cents per mile), the costs of purchasing and maintaining any uniforms necessary to your volunteer work, and parking in a garage if required. if you have to go on a trip as part of your duties, you can claim a charitable contribution deduction for travel expenses providing there was “no significant element of personal pleasure, recreation or vacation in the travel.”