Tax season may not be the most exciting time of year, but it can present opportunities for maximizing your savings through tax deductions. While many of us are aware of common tax write-offs such as mortgage interest or charitable donations, there are lesser-known deductions that can help boost your refund. Here are ten surprising tax deductions you may not have known about:
1. Home office deduction
If you work from home or have a designated area for running a business, you may be eligible to deduct expenses associated with your home office. This includes part of your rent/mortgage interest, utilities, and other qualifying expenses.
2. Job search expenses
Expenses related to finding a new job in the same line of work can be written off on your taxes including resume writing services, travel costs for interviews and more.
- Please note that this applies only for out-of-pocket expenses exceeding two percent (2%) of adjusted gross income.
3. Fitness refunds
Some healthcare providers offer fitness programs incentives where consumers who workout regularly receive credits towards their monthly premium payments.
4. State sales taxes deduction
If you live in a state without any income tax then residents can still take advantage by receiving credit each year based on their annualized expenditures on certain items such as automobiles or aircrafts purchases.
- Only applicable if taxpayers opt to use itemize instead standard deduction methods
5. Moving Expenses refunded by employers
Job-related moves costing over fifty miles from an employee’s original residence will allow them to receive compensation up to $0/pound reimbursement when relocating furniture and personal belongings in conjunction with moving cost reimbursements
- The move must take place within one year after starting employment at the new location
- The employee must continue working with the same employer full-time for at least 39 weeks during the first year following the move
6. Live-in nanny tax deductions
If you have childcare provided by a live-in nanny, you may be able to take advantage of tax breaks such as FICA taxes for household employees.
7. Energy credits
Investments in certain types of energy-efficient improvements on residential homes like blown-in insulation and installation of solar panels are eligible for tax credits up to $500.
- Homeowners must ensure these upgrades meet stringent standards set by IRS regulations before claiming any credits
8.. Childcare expenses
The federal government has a Child and Dependent Care Credit that can be claimed when paying for childcare expenses when filing personal income return forms using Schedule C.
-Households with one or more children under age 13 and needing childcare to work or look for it are qualified as long as they pay someone who is not related to them
9. Charitable Mileage deduction rates
Taxpayers can claim mileage rate deductions incurred while volunteering at non-profit organizations including fuel, parking fees, tolls, etc.
- A record of charitable activities indicating date(s), location(s), name(s)of organization(s)and miles driven throughout calendar year should
be presented alongside relevant deductions
10. Tax consultation fee deduction
Costs associated with acquiring professional assistance completing annual income returns or seeking advice on interpreting complex tax code systems would be subject to claimed reimbursements aligned directly with type/amounts received
By tapping into these tax-deduction opportunities, you can maximize your savings without having to compromise cash flow every month! As always please check with your accountant regarding eligibility requirements before filing taxes this year!
Q: Can I deduct expenses related to my job search on my taxes?
A: Yes, you may be able to deduct job search expenses such as resume preparation fees, travel expenses incurred for job interviews, and employment agency fees. These deductions apply if you are searching for a new position in your current field of work.
Q: Are medical marijuana expenses tax deductible?
A: No, the IRS does not allow medical marijuana expenses as a tax deduction because it is still considered illegal under federal law.
Q: Can I claim home office deductions if I work remotely due to COVID-19?
A: Yes, if you are an employee or self-employed individual who works from home due to COVID-19 and use part of your home exclusively and regularly for work activities, you may be eligible for a home office deduction on your taxes. However, there are specific eligibility criteria that must be met before claiming this deduction.