Overlooked Tax Deductions

by Dual Income No Kids on December 18, 2009 · 0 comments

Overlooked Tax Deductions

In keeping with our recent trend of tax-related postings (“Learn How to Manage Your Own Taxes” and “2009 Last-Minute Tax Tips”) I felt it would be appropriate to share a link to an article I saw on MSN Money regarding little-known and overlooked tax deductions that will definitely come in handy when I start to do my taxes.

Some of the deductions I can’t qualify for, such as the military reservists’ travel expenses or the child care credit (after all, I am still a DINK) but there are plenty of other excellent deductions to take advantage of. The most interesting and/or relevant as far as I was concerned included the following:

  • Moving Expenses Incurred When Getting a New Job – If you move to a new home to take a new full-time job (and start working at the new job at least 12 months after making the move) whose location is at least 50 miles farther away from your old house as your old job was then you have a whole slew of deductions available. Gas mileage at a rate of 24 cents a mile, packing equipment, the cost of movers and even the cost of temporary lodging while making the move are all included in the available deductions. This was a great deduction for me when I moved from Indiana to Virginia to take my first job our of college and my new employer didn’t cover all of my moving expenses.
  • State Tax Paid Last Year – If you owed state taxes last year, then you can deduct those on your state tax deduction for this year. Nice!
  • Sales Tax Deduction For the Purchase of New Cars – This one is dependent on income; as you hit an adjust gross income as a married couple of $250,000 or $125,000 if single the benefits start decreasing. But this deduction works in one of two ways: either you can itemize the deduction or you take an enhanced standard deduction. Note that the maximum purchase price for each vehicle can be no more than $49,500.
  • Credit For Energy-Saving Home Improvements – In keeping with the latest “green” movement and the broader push to more energy efficiency (not to mention a means for saving on monthly energy bills) the federal government has instituted a tax credit equal to 30% of the cost of making energy-saving home improvements. Note though that the maximum credit you can claim is $1,500 total over last year and this year. That limit doesn’t apply to residential changes that introduce alternative energy sources to the home. The full 30% can be claimed there.

It’s always a good idea to look into the deductions that you’re eligible for. There may be no benefit to itemizing deductions, as the standard deduction might be more than what you’re eligible for. But it’s a good idea to at least look into it, and programs like TurboTax do a great job of walking you through the process and helping you make the decision.

-Michael

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