Ask anyone what causes them the most problems at tax time, and chances are they’ll say deductions. Most of us dread tax time, and deductions are one big reason why. What are you eligible for? Are you taking advantage of every deduction you’re entitled to? The fact is, most people aren’t aware of the deductions they’re eligible for, and they’re missing out on the possibility of lower bills at tax time, or even missing out on a refund.
Fortunately, learning about the most common deductions-the ones you’re most likely to be eligible for-is easy, and once you know what they are, figuring out whether you’re eligible isn’t too difficult. Knowing the types of deductions you’re eligible for is useful even if you hire a professional to prepare your taxes, as you’ll know which papers and receipts you need to collect before they start.
This is by no means a complete list, and there is a wide variety of expenses you may be eligible to claim for. This list comprises some of the most commonly used deductions that many people are eligible for, so you can use this as a starting point for your preparation.
Auto expenses such as gas mileage and registration fees are a common deduction for many people.
Real estate expenses you may be able to claim deductions for include mortgage interest, prepayment interest and early withdrawal penalties, real estate taxes, and any points you paid on the mortgage for your primary residence.
Books and publications such as trade journals, newspapers, and other publications you use in your profession.
Dues and fees you may be able to claim deductions on include union dues, initiation fees, dues paid to any professional organizations you belong to, dues paid to chambers of commerce or similar organizations, and regulatory fees or licenses fees you pay to a state or local government or professional licensing association.
Charitable donations can be claimed on whether they are cash or non-cash contributions, but they must have been made to U.S. charities to be eligible.
Investment expenses you may be able to claim for include legal, investment, and brokerage fees, margin interest you pay in investment accounts, rentals on safe deposit boxes, and costs you incur when filing taxes (including online fees, accountant fees, and the cost of any tax preparation software you purchase).
Casualty and theft losses that you might be eligible for claim for include home or property losses you incur as a result of theft or acts of nature.
Business use of home computer equipment and internet connection can be an eligible deduction if your work use of them is required as a condition of your employment, and if the use is a convenience for your employer (as opposed to being a convenience for you). You may be able to claim the use of your home computer, internet connection, and any other home supplies or tools you use for work.
Education and research deductions you might be eligible for include education expenses, college fees, and any research expenses which are incurred via your profession.
Remember, this list is just a starting point, and there are many other types of deductions for which you may be able to claim. If you think you may qualify for some of these, research or talk to a qualified tax agent or accountant to confirm the deductions you’re eligible for.
