Every taxpayer aims to minimize tax liability and keep as many of those hard-earned dollars as possible. One way to do that is to maximize your itemized income tax deductions. Some commonly asked questions CPA’s get are–Can I deduct anything else? Am I missing anything?
I would like to let you in on the secret and share a list of the top 10 most overlooked tax deductions:
- Medical and dental expenses – all the following and more may be deducted on your tax return: Health insurance & long-term care premiums, prescription drugs, transportation expenses to medical facilities or doctors’ offices (don’t forget that mileage log), Nursing home medical expenses, hearing aids, glasses, contact lenses, orthopedic shoes, some stop-smoking treatments, nurses’ fees, weight-loss programs prescribed by a doctor.
- Personal property taxes on cars, boats, etc.; and state sales tax paid on a purchased vehicle, boat, home building materials, etc.
- Charitable donations including clothing and other goods donated to a charity. You can also deduct mileage incurred while performing charitable activities. (again don’t forget that mileage log)
- Safe deposit box fees.
- Hobby expenses up to the amount of hobby income.
- Job hunting costs.
- Moving expenses incurred due to a change in your job or business location. Your new workplace must be at least 50 miles further from your old home than your old job location was from your old home.
- Members of the National Guard or military reserve who travel more than 100 miles from home and stay overnight may write off the cost of travel to drills or meetings. Qualified individuals can deduct the cost of lodging and half the cost of meals, plus an allowance for driving your own car to get to and from drills. For 2014 travel, the rate is 56 cents a mile. You may claim this deduction even if you use the standard deduction rather than itemizing.
- Child care credit and other care credits such as child care costs, summer day-camp, care expenses for adult dependents
- Energy-efficient home improvements–There’s no longer a tax credit to encourage homeowners to save energy by, for example, installing storm windows and insulation. But the law still offers a powerful incentive for those who install qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. Your credit can be 30% of the total cost (including labor) of such systems installed through 2016.