Preparing and paying for your taxes has become increasingly stressful and complicated for many individuals and families. However, there are some commonly missed tax deductions that will assist you in keeping more of your hard-earned income.
Although many of the expenses can pertain to you, I would suggest discussing them with your tax professional before attempting to take the deductions. Many of the deductions that we will discuss are included in your list of itemized deductions.
You most likely know that you can currently deduct your property taxes and mortgage interest, but did you know that you can potentially deduct your tax preparation fee, your brokerage account management fees, and attorney fees related to earning income and paying taxes? These are just a few of the expenses
There are quite a few deductions that many people take on their tax returns that are more commonly known. For example, you are able to deduct your medical expenses (over 7.5% or 10% of your income, depending on your age), your real estate taxes, your state income taxes, your mortgage interest (up to $1.1 million dollars of mortgage debt), and charitable contributions (keep in mind that the government generally will not be asking too many questions if your donations are under 3% of your income).
Most taxpayers also know that they can deduct their student loan interest and Traditional IRA contributions, depending on your income level and other factors. However, there are several deductions that are less well-known (hopefully your accountant knows about them).
Commonly Missed Deductions
While many tax deductions are fairly well-known, there are many that tend to fly under the radar. If you are a teacher, you are able to deduct up to $250 from your Adjusted Gross Income. In addition, along with other employees, you can deduct your remaining out-of-pocket expenses (including supplies, a portion of your cell phone bill, travel costs to clients, and other unreimbursed expenses) as an itemized deduction.
Also, you might be able to deduct your tax preparation fees, the fees that your financial advisor charges, and any attorney fees that are derived from your income earning potential or finances.
Did you know that if you do not pay state income taxes, you can deduct the sales tax that you pay? If you fall short on your list of itemized deductions, you are able to take the standard deduction of $6,350 per person. This would be in addition to the possible per person exemptions that are used to calculate your taxable income. College, before and after school care, and day camp expenses are also deductible for many taxpayers.
Wrapping It All Up
All in all, there are plenty of legal tax deductions and loopholes that allow you to reduce your tax liability to the government. Whether you are taking the more commonly known home ownership or IRA deductions, or the lesser known unreimbursed employee expense deduction, it is in your best interest to legally reduce your tax bill as much as possible. I look forward to assisting you in keeping as much of your income as possible.