Doing your own taxes could mean missing out on hidden deductions. Julius Green, a tax practice leader at accounting firmParenteBeard, gives tips on what to keep in mind when filing so you can get the most money back.
“If you had a job-related move, you can certainly deduct moving expenses,” Green says. Besides moving, if you had any other expenses related to your job that you weren’t reimbursed for, those expenses are deductible too. “For example, let’s say you bought a computer. If you are able to reasonably argue that you use your computer 50 percent for personal use and 50 percent for work-related reasons, then you can deduct 50 percent of the cost of your computer,” he says.
The same applies to your phone bill. Green says to take a monthly bill typical of your year-round usage and highlight the work-related expenses. If your job requires tools that you bought and weren’t reimbursed for, you can list those as well. All of these type of deductions are located on your Schedule A, under miscellaneous.
The government is rewarding people making a conscious effort to live more environmentally friendly. “Certain energy-efficient improvements in your home, which are listed, you can get a credit for,” says Green. “If you have energy-efficient furnaces, solar panels or water heaters, you can get a credit.” Unfortunately, taking public transportation to work or carpooling doesn’t count as helping the environment as far as your taxes are concerned. “Commuting expenses are never deductible,” Green explains.
“People are usually aware of their charitable contributions and remember to deduct those, but they often don’t know that any money you spent while volunteering is deductible, too,” says Green. “For example, if you use your own personal vehicle driving around doing things for the charity, you can deduct the milage at 14 cents a mile.”
“On your Schedule A, there’s a section for medical-related expenses, which you can deduct as long as you are over a certain threshold,” explains Green. If you don’t have insurance or underwent a particularly expensive medical treatment, this is one way to get money back you don’t want to miss.
“If the interest on your student loans went up, you are able to deduct that, based on your income,” says Green. Also, if parents have a 529 Plan, saving for their kids’ college, remember that they are tax-free contributions for federal taxes and are generally deductible for state tax purposes when contributed, although there are limits, which varies state to state.
If you’re a teacher and spent any of your own money on classroom decorations, supplies or other school-related expenses, Green says they are deductible up to $250. You don’t have even have to complete a Schedule A for itemized deductions to get this benefit.
If all of this still sounds too complicated to do on your own, don’t think you can’t afford to hire a professional to prepare your tax return for you. As Green points out, that’s deductible too.
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