Often Overlooked Tax Deductions That Could Save You Money

Often Overlooked Tax Deductions That Could Save You Money

There are a number of deductions that many people miss when they gather their receipts together to tackle tax preparation. Whether doing it yourself or hiring a professional for your personal finance be sure that the deductions listed below from Taxfyle are taken into consideration.

  • State Sales Tax

State and local amounts due are deductible from your tax due. The IRS has tables for individuals to deduct the estimated sales taxes they paid based upon income levels, taking into account the statistical amount that was paid for common usage.

These rates do not include purchases of luxury or large purchases. If you bought a new car or boat, new major appliances such as a washer or dryer, a new spa or made any other major purchases the sales tax for these purchases are not calculated in the formulas and may be added to the amount in the charts.

  • Out Of Pocket Charitable Contributions

Did you know you may deduct 14ยข per mile for using your car when used for the benefit of a qualified charitable contribution? Just keep accurate records.

Food you donate to a soup kitchen or food pantry may be deductible if the organization is IRS qualified. This includes food you may purchase and prepare for such organizations. Even the stamps and supplies you purchase to support your local school’s fundraising promotions are deductible.

  • Reinvested dividends

While not technically a deduction, reinvested dividends in your mutual funds and investments change your cost basis and reduce any amounts reported as income, thus reducing tax debt for your personal finance.

Consult your tax professional or investment adviser to accurately report these savings, reducing future capital gains, thereby reducing tax debt.

  • Child And Dependent Care Tax Credit

A tax credit is better than a tax deduction as it reduces amounts owed dollar for dollar rather than the estimated 20% savings of a deduction.

The government has tables to help you determine the amount of credit you may receive. Even if you have a tax-favored reimbursement account through work, any amounts over $5,000, up to $6,000, that are not reimbursed may be declared by you to gain a tax credit.

  • Prior Year State Taxes Paid

If you had a tax liability the previous year you filed your return that amount may be included on your current year return under state and local taxes. This deduction may be up to $10,000. Don’t forget this often overlooked tax deduction benefit.

Taxfyle is a tax preparation resource you may want to refer to for help in preparing your tax returns this year. They seek to provide you all the deductions you are entitled to when filing your current tax returns.

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