Published On: Jan 12 2012 01:20:55 PM CSTUpdated On: Apr 15 2015 02:00:30 AM CDT
Cut your tax bill to the bone by claiming all the breaks you deserve -- including some you may not know about. Kiplinger breaks down the most overlooked tax deductions.
State Sales Taxes -- Although all taxpayers have a shot at this write-off, it makes sense primarily for those who live in states that do not impose an income tax.
Reinvested Dividends -- Don't forget to include mutual-fund dividends that are automatically invested in extra shares. Otherwise, they'll be taxed twice.
Student Loan Interest Paid By Parents -- A child who is not claimed as a dependent can deduct up to $2,500 of student-loan interest paid by their parents.
Out-Of-Pocket-Charitable Deductions -- you can write off out-of-pocket costs incurred while doing work for a charity, such as driving costs or ingredients for food prepared for a nonprofit organization's soup kitchen.
Job-Hunting Costs -- If you're looking for a job in the same line of work, you can deduct job-hunting costs as miscellaneous expenses if you itemize. They must exceed 2 percent of your adjusted personal income.
Moving Expenses For Your First Job -- To qualify, your first job must be at least 50 miles from your old home. If you qualify, you can deduct the cost of getting yourself and your household goods to the new area.
Military Reservists' Travel Expenses -- Members of the National Guard or military reserve may tap a deduction for travel expenses to drills or meetings. To qualify, you must travel more than 100 miles from home and be away overnight.
Self-Employed Medicare Premiums -- People who continue to run their own businesses after qualifying for Medicare can deduct the premiums they pay for Medicare Part B and Medicare Part D and the cost of supplemental Medicare policies.
Child Care Credit -- Parents can qualify for a tax credit worth between 20 percent and 35 percent of what you pay for child care while you work.
Estate Tax On Income In Respect Of Decedent -- If you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax, you get an income-tax deduction for the amount of estate tax paid on the IRA assets you received.
State Tax Paid Since Spring -- Did you owe tax when you filed your 2010 state income tax return in the spring of 2011? Remember to include that amount in your state-tax deduction on your 2011 federal return.
Refinancing Points -- When you refinance, can deduct the points on the new loan over its lifetime. That means you can deduct 1/30th of the points a year if it's a 30-year mortgage, resulting in $33 a year for each $1,000 in points you paid.
Jury Pay Paid To Employer -- If you have to turn over any jury pay you earn to your company's coffers, you can deduct that amount from your taxes that year.
American Opportunity Credit -- This tax credit is available for up to $2,500 of college tuition and related expenses paid during the year.
Baggage Fees -- If you're self-employed and travelling on business, be sure to add those mounting baggage fees to your deductible travel expenses.
Energy-Saving Home Improvements -- This credit is worth 10 percent -- or up to $500 -- of the cost of qualifying energy savers, including new windows and insulation.
Additional Bonus Depreciation -- Business owners can write off 100 percent of the cost of qualified assets placed in service during 2011. This break applies only to new assets with recovery periods of 20 years or less, such as computers, machinery, equipment, land improvements and farm buildings.
Break On The Sale Of Demutualized Stock -- If you sold stock in 2011 that you received in a demutualization, be sure to claim a basis to hold down your tax bill.
Tax-Free Transit Subsidy -- The fiscal cliff deal brought a retroactive break for commuters who used public transit to get to work in 2012. Folks who took the bus or train can now receive up to $240 tax-free from their employers to cover the cost of transit expenses. Check with your human resources office to see if your employer offers a transit-subsidy program.