Friday, December 09, 2011

Easy to Miss Tax Deductions

Note: Thanks to Kay Bell for running the TPIN Competency Article in "Merry Taxmas" in the December Carnival of Taxes at Don't Mess with Taxes this past Monday.

Kiplinger recently gave a list of ten commonly missed tax deductions, which should actually be eight because one (child care) is a credit (similar to but not a deduction) and one is an increase in basis (only deductible when an item is sold). The eight mentioned include state sales taxes (keep a special eye out here if you made a large consumer purchase like a car or boat. However, also remember that you get EITHER sales or income tax and that the annual renewal may not have passed by Congress yet); out-of-pocket charitable (remember charitable mileage and make sure you have receipts (cancelled checks no longer work in an audit) if claiming over $250 for a given charity); interest on student loans paid by parents; job-hunting costs (primarily by first-time job hunters--the 2% of AGI limit will make it hard for present job holders to qualify); cost of moving to a new job (remember the 50 mile rule and the 39 weeks in first year rule--this ususally means a move from one city to another. It IS possible if you lost a job through no fault of your own and moved twice in the same year to take two rounds of this deduction--I did so in 1978); reservist costs of training (similar to business travel if you travel over 100 miles and are away from home at least overnight); deductions of Medicare premiums paid (primarily available to the self-employed; avoids the dreaded 7.5% rule) and estate tax paid related to income earned by decedant (a small giveback from the government for adding insult to injury by double taxing (income and estate) money earned by someone that you probably were grieving).

Kiplinger also provides a slide show of other potential tax deductions. Throughout this month, bloggers listed in the blogroll at right will be mentioning other tax deductions to remember; it may be well worth your time to check these blogs throughout the month to make sure that you do not miss any important deductions.


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