Drake Software blog for tax pros, covering tax, IRS news, and more

The Forgotten Tax Deductions

The Forgotten Tax Deductions

The Forgotten Tax Deductions

Would you like to be a hero to your taxpayers?  Offer a few tips to them about deductions they may not know about.  Include a list of possible deductions in a pre-season email reminder or include them in a list of hot topics on your website – this will help them prepare for their office visit and help them build their trust in you.  Here are a few examples of those things taxpayers often miss…

  • Volunteer Work.  Expenses incurred while doing charitable work, such as mileage, meals, and uniform cleaning fees may be deductible.
  • Job Hunting.  Taxpayer who itemize and incur costs while job hunting that exceed two percent of the taxpayer’s adjusted gross income can deduct those expenses.
  • Military Reservists’ Travel Credits.  Reservists and members of the National Guard who travel more than 100 miles and stay overnight for training can deduct related expenses.
  • Child and Other Care Credits.  Summer child care costs for day-camps can be deductible.  However, you cannot deduct expenses for sleep-away camps.  Care expenses for adult dependents may also be deductible.
  • Mortgage Refinancing.  If a homeowner refinances and uses proceeds to improve their principal residence, they may be able to deduct the points paid on the loan for the year of purchase.
  • Medical Expenses.  Travel expenses to and from treatments, including mileage and meals, may be deducted if the taxpayer’s medical expenses reach the 7.5 percent of adjusted gross income threshold.
  • Retirement Savings. Moderate and low-income taxpayers may be able to save as much as $1,000 on contributions to an eligible retirement account.
  • Educational Expenses. There are many education expenses that can be deducted – tuition and fees, the Lifetime Learning Credit, and the Opportunity Tax Credit.  If a taxpayer is pursuing any kind of education, it’s worth looking into.
  • Energy-Efficient Home Improvements.  There are still credits worth up to $500 for energy-efficient home improvements available for 2011 returns.

Taxpayers welcome any advice that may help them save money.  These simple tips may make a big difference in their bottom line.

 


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