For 18 years I have been preparing income tax returns for individuals. Unfortunately even as a tax preparer I miss deductions on my client’s tax returns but for those who prepare their own returns I am certain these 10 tax deductible items are almost always overlooked.
1. Miles driven for medical related incidences are deductible as an itemized deduction. The rate is $.20 for 2007 and $.19 for 2008. Miles are totaled for doctor visits and hospital visits. Start adding them up and you will be amazed. Think about it on a weekly or monthly basis and then multiply by 52 or 12 respectively.
2. Interest paid on a 2nd mortgage is deductible as long as the residence has a function kitchen and bathroom. Have you ever considered your motor home in this hidden tax deductible item?
3. Charitable deductions are made and often forgotten about. Sometime we just cannot remember the box of cookies we bought from our neighbor’s daughter who is with girls scouts as well as many other donations throughout the year. Add them upyou will not be sorry.
4. If you had to move during the year for work then do not forget the moving expenses. You must meet certain tests so be sure to discuss this with your tax advisor. Tax deductible items include $.20 per mile, actual out of pocket expenses for oil and gas. Also include expenses for storage of household goods and lodging expenses.
5. The alimony deduction is often over looked because many people do not want to think about a painful divorce. The amount rewarded for child support is not deductible though.
6. Student loan interest paid on loans for education is deductible. People often miss this one because a lot of changes take place after graduation and this deduction gets over looked. With rising education costs the student loan interest really adds up.
7. Most of us know that we can deduct our real estate taxes on our home but did you also know the state income taxes withheld from your W-2 are also deductible. Also the state income taxes paid during the year for a prior year should be included as a deduction.
8. Loans made to family and friends who have failed to repay you are deductible as worthless debts on Schedule D. You are limited to $3,000 per year until the full loss is taken. But if you have capital gains then the whole loss can be taken up to the amount of the capital gain plus $3,000.
9. Losses from business endeavors will be covered in other articles but for the present let me just say do not be timid to take losses on line 12 of your 1040 which arise from self employment. If your venture was intended to turn a profit then you should be taking the deduction.
10. When a family member moves into another home you own often you will forget to report it. The incentive to reporting is that this is a tax deductible item. You can usually create a loss to be reported on your 1040 when these deductions are properly accounted for.