The tax filing deadline will be here before you know it.
Don't wait until April 18 to file your taxes. Rushing to file might result in missing out on valuable tax deductions, some of which you might not even know exist.
Start filing your taxes early so you can claim deductions, including the six deductions you didn't know existed:
1. Charitable gifts
Charitable donations are a sought-after tax deduction, but you can deduct much more from your tax bill. According to TurboTax, you can also deduct out-of-pocket expenses you spent for charitable work.
"You can deduct out-of-pocket expenses you spent for charitable work."
Those expenses can include baking ingredients for a charity bake sale and even transportation costs (parking and tolls). In order to deduct out-of-pocket costs related to volunteering, you must not have been reimbursed for them.
Be sure to save every receipt documenting transactions you completed for charitable organizations.
2. Dental and medical expenses
GoBankingRates explained that you can deduct medical and dental expenses for your family (yourself, spouse and dependents). However, these expenses can only be deducted after they exceed 10 percent of your annual gross income.
Individuals 65 years or older can also claim this deduction, though medical expenses only need to exceed 7.5 percent of their AGI.
3. Job hunting
If you spent any time looking for a job recently, you may be able to itemize those costs and deduct those expenses. But you can't deduct expenses if you're a first-time job seeker. The IRS also has a few additional requirements to meet.
First, costs must be spent on a job search in your occupation field. In other words, a doctor can't deduct expenses if he or she is looking for a job in marketing.
So exactly what job-related expenses can you deduct? According to the IRS, they include:
- Any fees you pay to agencies to help you find employment.
- Costs for preparing and mailing resumes to prospective employers.
- Travel expenses (cab fares, parking and gas), but only if the primary purpose of the trip was to look for a new job.
Keep in mind that expenses can only be deducted if the total exceeds 2 percent of your AGI.
4. Continuous learning
You don't have to be in college to deduct educational expenses. Many working adults take classes to improve personal skills and advance in their careers. The Lifetime Learning credit can reduce the tax bill up to $2,000.
The IRS stated that if you pay the qualified expenses for higher education for yourself, your spouse or a dependent (provided both are a qualified student), you can claim this credit.
5. Teacher expenses
Keeping with educational benefits, K-12 teachers can deduct up to $250 if they use personal money to buy supplies for their classroom. These costs can't be reimbursed if you want to claim them.
The IRS said qualified expenses include books, supplies (scissors, pencils, pens, etc.) computer equipment and even athletic supplies.
If you're a teacher, you've likely used your own money on occasion, and while the school may not be able to reimburse you, the IRS has you covered.
6. Babysitting services
Oddly enough, you may be able to deduct the cost of a babysitter, but only under certain conditions. During the time a babysitter is watching your kids, you must be volunteering for a recognized charity and can't be paid. If you're deducting the cost of a babysitter, it'll appear on your tax return as a charitable contribution.
To avoid suspicion, thoroughly document the instances you hired a babysitter while you were volunteering.
7. Sales tax
If you live in a state with no income tax, deducting sales tax could help you save a lot of money. You can even claim this deduction when living in a state with income tax, but you'll need to decide whether you want to deduct the sales or state income tax.
8. Tax preparation fees
Whether you're preparing taxes with a computer program or the help of a professional, you can deduct preparation and electronic filing fees. But the total amount must be greater than 2 percent of your AGI.
As you start to file your taxes, take the time to claim as many deductions or credits as possible.
Be sure to consult with a tax professional for help on your taxes.
For more information about smart ways to manage your finances, contact Landmark Bank.
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