Don't Overlook These 6 Important Deductions!
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1. State taxes from last year. If you owed state tax in 2006 and paid it when you filed last April, then don't forget to include that amount with your state tax deduction on your 2007 return, along with state income taxes withheld from your paychecks.
2. Moving expenses for a new job. If you moved last year to take a new job, you may qualify to deduct some of your moving costs. But keep in mind the new job site must be at least 50 miles farther from your former home. Also, you must be employed full-time for at least 39 of the 52 weeks following the move OR you must be self-employed full-time for both 39 of the 52 weeks and 78 of the 104 weeks immediately following the move. If you meet these criteria, you can deduct the following:
- Travel costs for you and your family and
- Actual moving costs for your furniture and household goods
Parking fees and tolls are tax-deductible, as are actual car expenses such as gas and oil. (If you keep accurate records, you can itemize; if not, just take 19 cents a mile for your deduction instead.)
3. Reinvested dividends. Trust us, a LOT of people miss this one. If you choose to automatically reinvest mutual fund dividends into extra shares, don't forget that each reinvestment changes your tax basis in that fund. The good news here is that it reduces your taxable capital gain (or, to spin it another way, increases the loss) when you redeem shares. If you forget to include the reinvested dividends to your tax basis, you're overpaying your tax!4. Out-of-pocket charitable contributions. Yes, a lot of people miss some of the smaller contributions they make throughout the year. Remember you can, and should, write off the "little things" that do so much good. For example, if you send out a couple of fund-raising letters every now and then for your child's school, and the postage comes out of your pocket, that's a write-off! These types of contributions DO add up, so keep accurate records and don't miss any legitimate deductions.
5. Student loan interest for your child. That's right — it used to be that neither parents nor kids benefitted from the interest paid on a student loan. Now, however, if you pay back your child's student loan, the IRS sees that as though you gave the money to your child who then paid the debt. So your child can actually deduct up to $2,500 of student loan interest paid by you!
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6. Jury pay. If your employer pays your full salary while you're on jury duty, then they usually ask for you to turn your jury fees in to them. However, you are required to report those fees as income, but you do have the right to deduct that amount (but many don't). The IRS has just made it easier by including a line dedicated to this deduction.
Look at it this way — if you're missing any of the above listed deductions, you're losing money when you don't have to. BUT if, on the other hand, you make sure to account for EVERY single dollar and deduction you're qualified for, you've essentially beaten the IRS!
Want more? We've got 'em — check out our Frequently Overlooked Deductions article by clicking here.
OK, that should cover you for this year; but we're sure you must be asking…
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