Tax laws and regulations pertaining to deductions can be quite confusing. While you may be familiar with standard rules such as the interest on a home mortgage, there are numerous other hidden tax deductions that can help save you money and fatten your refund from the IRS. Here are are several hidden tax deductions that may surprise you and help you save money.
Hidden Tax Deductions That May Surprise You
Refinancing
The home-buying process can be exciting. Unfortunately, closing costs and the down payment can quickly add up. An added benefit to purchasing a home is that you’re able to deduct the interest paid on your mortgage each year. With interest rates still at an all-time low, many homeowners are taking advantage of the low costs by refinancing their current mortgage. A hidden advantage that can aid you on your taxes is that you’ll be able to deduct refinancing points that you’ve paid.
Home Renovations
If you own a small business, you realize the importance of financial planning and using private capital to grow your company. As your bank account grows with your business success, you’ll be able to save money for a down payment on a home.
If you purchase a home that needs a little work, you can make your renovations work for you. In addition to helping you save money on your utility bills, energy efficient appliances and materials are tax deductible. From appliances and wall insulation to new water heaters and wind turbines, the credits can be pretty substantial.
Doing Good Deeds
Charitable donations are a no-brainer when it comes to deducting them at tax time. However, did you know that you can deduct materials for other things such as school fundraising or delivering meals to seniors?
If you’ve been assigned to bake cookies or a cake for your local school bake sale, you’re allowed to deduct the baked goods such as chocolate morsels, cake mixes, and cupcake liners. If you foster a cat or dog, you can deduct the food and other related costs that you’ve incurred while you housed the pets in your home.
Day Camp
If you’re a working parent, you may have realized the value of deducting your child care expenses on your tax return. However, if your child goes to summer camp and doesn’t stay overnight, the time away is similar to your childcare deduction.
Working Expenses
If you work for an employer, you may be able to deduct costs incurred from your job. If you use your own cell phone, and your co-workers contact you with work related questions, you can deduct the minutes and costs spent talking to them.
You can also deduct dues for joining a union or career advancing educational courses if you pay them out of your own pocket. Other job related hidden deductions include resume mailing, printing and gas used to go out on your job interviews.
Work Related Move
If you’ve been working for a company, and they ask you to move to another state, you can deduct some of your moving costs. Take special note of items such as a moving truck, boxes, and gas. However, you have to pay for the expenses on your own and not get reimbursed by your employer.
Self-Employment
If you’re fortunate enough to enjoy a career where you’re working for yourself, you know the many advantages that it can bring. In addition to being able to work from the comfort of your home, you can also take a number of tax deductions if you’re self-employed.
Items included in the hidden deductions include self-employment taxes, retirement contributions to SEP and health insurance expenses. You also want to keep a running total of telephone costs, office supplies, and other relatable expenses.
Are you tapping into all the hidden tax deductions? Which ones do you use?