Tips on Tax Deductions
Thanks to one tax-savvy blogger from All Things Financial who took the time to skim The Ernst & Young Tax Guide 2007, a 700-page book that covers federal income taxes in detail, including tips, tricks, and other cool tax stuff (hey, there’s some light reading for you…) we at Sound Money Tips are able to offer you his super-distilled list of the Top 50 most overlooked tax deductions. Here they are, by category. For more information on each, you’ll just have to go to the guide:
1. Necessities - Contact lenses, eyeglasses, and hearing devices; contraceptives, if bought with a prescription; special equipment for the disabled; special schools and separately stated fees for medical care included in tuition.
2. Employment-related - Employee contributions to a state disability fund; costs associated with looking for a new job in your present occupation, including fees for résumé preparation and employment of outplacement agencies; education expenses to the extent required by law or your employer or needed to maintain or improve your skills; employee’s moving expenses; federal state tax on income with respect to a decedent; dues to labor unions; 50% of self-employment tax; impairment-related work expenses for a disabled individual; health insurance premiums if self-employed, personal liability insurance for wrongful acts as an employee; protective clothing required at work; trade or business tools with life of one year or less.
3. Investments - Fees for a safe-deposit box to hold investments (e. g., stock certificate); investment advisory fees; margin account interest expense; penalty on early withdrawal on savings; worthless stock or securities; amortization of premium on taxable bonds; long-term care insurance premiums.
4. Charitable Donations – Out-of-pocket expenses relating to charitable activities, including the standard mileage deduction; appreciation on property donated to a charity; appraisal fees for charitable donations or casualty losses.
5. Accidents - Casualty or theft losses; theft or embezzlement losses; hospital services fees (laboratory work, therapy, nursing services, and surgery); medical transportation, including standard mileage deduction and lodging expenses incurred for medical reasons while away from home; alcoholism and drug abuse treatment.
6. Bills – Accounting fees for tax preparation services and IRS audits; IRA trustee’s administrative fees billed separately; foreign taxes paid; State personal property taxes on cars and boats.
7. Real Estate – Commissions and closing costs on sale of property; mortgage prepayment penalties and late fees; points on a home mortgage and certain refinancing; real estate taxes associated with the purchase or sale of property; seller-paid points on the purchase of a home.
8. Lifestyle – Cellular telephones; cleaning and laundering services when traveling; fees paid for childbirth preparation classes if instruction relates to obstetrical care; foster child care expenditures; improvements to your home; lead paint removal; legal fees incurred in connection with obtaining or collecting alimony; gambling losses to the extent of gambling winnings; depreciation of home computers; subscriptions to professional journals.
Comments
Lifestyle: Since when are cellular telephones tax deductible?
Oh Lordy. You are seriously misleading people here. Many of these items are only deductible if they exceed a certain percentage of adjusted gross income (e.g., medical, unreimbursed employee expenses, casualty losses, miscellaneous itemized deductions.) Others are only deductible if the taxpayer is self-employed. Still others are not deductible at all in the year you pay them (Improvement to your home add to your home's cost basis. They are not deductible.)
To answer Rob's question, cell phone charges may be deductible but only to the extent they are used for business. How much of the bill you can deduct, and where you take the deduction, depends on whether you are an employee or self-employed.
P.S. You know you have a problem with the item "federal state tax on income with respect to a decedent," right?
Thank you, GetSheila! I kept re-reading the beginning of the article, thinking I'd missed the part where it tells you what special group you have to be in to get these deductions. I'm glad I wasn't as clueless as I was beginning to feel.
I wait tables and I would like to know if you could deduct tip outs. I give a certain percentage to the bar, busser, and expo. My employer has claimed the amount of tip outs as earned income.
gotta see that
ARE Homeowners Association fee(HOA) tax deductable?
Is there a deduction for washing and waxing the car every 15 days?
Ravee Thuppala