Dallas, TX (Vocus/PRWEB) March 23, 2011
When you overlook tax deductions, you miss tax-savings opportunities. The Texas Society of Certified Public Accountants explains that while taxpayers are generally familiar with common deductions, such as mortgage interest and medical expenses, some fail to claim others. Here is a rundown of some lesser-known tax deductible expenses to consider.
Most people know that cash charitable contributions can be deducted as an itemized deduction. But not everyone realizes that you can deduct the fair market value of non-cash donations, such as used clothing, furniture, and household goods.
STUDENT LOAN INTEREST
Interest paid on student loans is deductible as an adjustment to gross income – up to $2,500 per year for as many years as it takes to repay the loan. This deduction is subject to a phaseout depending on your adjusted gross income.
Contributions to a traditional IRA might be deductible, depending on your age, total income, and whether you are covered by a retirement plan through your employer.
HEALTH INSURANCE FOR SELF-EMPLOYED WORKERS
Premiums you pay to cover yourself and your family are 100 percent deductible as an adjustment to gross income.
EARLY WITHDRAWAL PENALTY
If you incurred a penalty as the result of an early withdrawal from a certificate of deposit or other type of time deposit savings account, the amount of the penalty is deductible as an adjustment to gross income.
SOCIAL SECURITY TAXES FOR THE SELF-EMPLOYED
In computing your adjusted gross income, you can deduct up to one half of self-employment taxes paid during 2010.
HOME EQUITY LOAN INTEREST
You can deduct interest payments on up to $100,000 of home equity loan debt.
Reservists who serve more than 100 miles from home and stay overnight are eligible to deduct non-reimbursed travel expenses.
Divorced taxpayers may write off alimony expenses as an adjustment to gross income, but not child support.
Teachers may claim up to $250 for out-of-pocket classroom-related expenses.
MISCELLANEOUS ITEMIZED DEDUCTIONS
There are a number of deductible expenses that fall into the category of miscellaneous itemized deductions. These expenses are deductible to the extent that their total exceeds 2 percent of your adjusted gross income. The most common are listed below.
- Unreimbursed Employee Business Expenses – This category includes business expenses you incur in connection with your job, such as dues paid to a union or professional society, business-related travel, courses you take to improve your job skills, professional books and journals, and work clothes and uniforms.
- Job Search Expenses – The money you spend looking for a job is deductible as long as you’re looking for a job in your current line of work. You may deduct the cost of travel (only if the trip relates primarily to seeking a new job), resume preparation, postage, and telephone calls – even if you don’t get the job.
- Investment Expenses – This category of miscellaneous itemized deductions includes investment fees, safe deposit box rental, subscriptions to investment publications and other expenses incurred in managing your investments.
- Tax Preparation Fees – You can claim a deduction for fees you pay to a CPA or other tax preparer, as well as expenses paid for tax preparation software, tax publications, and electronic filing.
PERSONAL FINANCE INFORMATION
For more tax tips and specific personal finance information for your stage in life, visit http://www.ValueYourMoney.org. While there, sign up to receive a free monthly electronic newsletter with personal finance tips on variety of topics.
TSCPA (http://www.tscpa.org) is a nonprofit, voluntary, professional organization representing Texas CPAs. The society has 20 local chapters statewide and has more than 29,000 members, one of the largest in-state memberships of any state CPA society in the United States. TSCPA is committed to serving the public interest with programs that advance the highest standards of ethics and practice within the CPA profession.
972-687-8688 or 800-428-0272, ext. 652