Frequently Overlooked Income Tax Deductions

Remember to include these frequently overlooked income tax deductions in your next tax statement ...

Income tax deductions can make a huge difference in your income tax obligations. However, many deductions can easily be missed if you don't plan ahead and look out for your own tax interests long before tax season. Too often, people turn to the standard tax deduction when in fact, they have many expenses that are valid deductions that should be itemized and can save them hundreds or more in tax dollars. A few tax saving deductions will not require that you fill out the long 1040 form to fully itemize, making it even easier to save on your tax burden.

The deductions that can be claimed regardless of whether you itemize or use the standard deduction may surprise you. These deductions are known as "above the line" deductions because they do not require itemization of all expenses to claim these income tax reductions. For example, did you know that the first $2,500 of interest paid to student loans is deductible? It is! Did you know that the first $4,000 of tuition and fees for certain expenses associated with higher education is deductible? If you had to move because of your job and the expenses were not reimbursed to you or paid by your employer, that amount is another deduction frequently missed. There is also a new deduction for travel expenses incurred by military reservists that have to travel for more than 100 miles and remain away from home overnight.

If you are self-employed, there are above the line deductions that you need to be aware of as well. All of the cost of your health insurance premiums obtained through your self-employment for both yourself and your family is counted as an income tax deduction. Half of the social security and Medicare taxes you paid in are also deductible as are your contributions to retirement plans.

Among the itemized deductions frequently missed by taxpayers are union fees, non-commuting travel expenses and the cost of continued education required by your job status such as recertification courses. You can even take the cost of safety deposit boxes, tax preparation expenses and some legal fees such as deductions that many people completely forget about. Of course, the standard itemized deductions that almost every one knows about include medical expenses if over certain limits, state and local taxes, charitable contribution and common business expenses such as uniforms.

If you own a business, you can use Schedule C to include deductions that might otherwise not be considered. The cost of advertising and promoting your business and carrying business liability insurance are deductible expenses. The cost of having an office in your home is a deductible expense as well. Certain legal and professional service fees can be an income tax deduction. Benefits and wages paid to employees including contributions to their retirement plans can represent a huge deduction for the business owner.

In order to ensure that you don't miss some large deductions that could save you a great deal of money, it is wise to consult with an income tax professional so that you don't miss any of these commonly missed tax deductions. Take the time to become better acquainted with tax professionals who can teach you how to maximize your tax deductions and learn about income taxes along the way.

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