Posted by Advanced Accounting & Tax Planning

Most Popular Tax Deductions You May Have Missed

Most Popular Tax Deductions You May Have Missed

Rather than handing over their hard-earned cash to the government, American wage earners are given a chance to pocket more income through itemizes tax deductions. Deductions have long meant more money for those who keep good records and less money for the IRS.

Changes of Tax Cuts & Job Act Rule

The decision to consider itemizing comes with a big caveat that was made in 2018 and will go into effect for the 2019 tax season by the Tax Cuts and Job Acts of 2017. Consider the new nearly doubled standard deduction of $18,000 for heads of household, $12,000 for individuals and married couples filing separately, and $24,000 for qualifying widow(er) s or married couple filing jointly before you go to the trouble of filling out that Schedule A form. 

You should factor the personal exemption that the TCJA does away into your calculations. For several tax deductions that you were able to take in 2017, it also eliminated or changed the rules. 

You are likely better off taking the standard deduction if under the new tax bill your total itemized deductions fall below the amounts listed below. If you have the opposite, it is better to read on for you to be knowledgeable about how you save even more through the most overlooked itemized deductions. 

Your home sweet home deductions

Hefty tax write-offs each year, private mortgage insurance premiums, and points paid when you bought your home are usually together with when you own one. For mortgage interest, there are also possible deductions. And during the time you live in your home, you can deduct property taxes that you paid. Remember that the new tax law lets you deduct interest on loans up to $750,000 (and $1 million is the limit for older loans) for mortgages taken out on or after December 15, 2017. In addition, for state and local taxes (SALT), taxpayers are newly limited to a $10,000 deduction that includes state and local income taxes, sales taxes, and property taxes. 

You can also get some tax benefits when you sell your home. Fees you incur such as costs of repairs or improvements made within 90 days of closing date or other fees you made to unload your home can be deducted. You can deduct the commission you paid to your real estate agent, any fees you paid at closing, and a portion of the property taxes you paid while you lived in the home can be deducted too. You can even deduct your moving expense if you are active-duty military. 

Tax Breaks can be driven home

When you buy a car, you pay a sales tax on it. And each year, some states continue to tax you. The privilege of using motor vehicles upon the public highways, that’s according to Kentucky state. You can deduct the percentage as part of your property tax if your state calculates a percentage of the vehicle tax based on your car’s value. Only a few states calculate their registration in this way such as Nevada. 

To register your car each year notices to demand tax payment are sent out by most states. File the receipt after you slap your new decal on your car and add that payment to your deductions for your April personal property tax. Keep in mind that this year, the $10,000 cap on total SALT taxes goes into effect. 

By doing good, you will be doing well

By increasing your charitable deductions, you can reduce your taxes. By including associated fees such as appraisal fees for big-ticket items you donate, you can fatten the sum when you remember doing so. When you donate an item (or group of items) worth more than $5,000, the IRS requires that you provide a qualified appraisal of the item returned. You need to pay a professional to assess the value of your donation if you are going to donate items such as electronics, appliances, and furniture. Don’t worry, the fee for that service is deductible. 

Cash contributions up to 60% of your adjusted gross income (AGI) is possible in the TCJA changes for 2018. The limit was 50% before. Property donations such as appreciated stocks are limited to 30% of AGI, property donations are what you will gain from the capital. Deduction for contributions that entitle you to college athletic seating right may no longer be available. 

Charity Free Rides

You can add the expenses to your charitable deductions if you are the type of person who likes to donate your free time to volunteer in your community and even use your own money to travel to your favorite charity. Keep good records of your charitable activities whether you ride a bus or drive your car. You should keep receipts for parking, tools, and public transportation or mileage logs for your car. 

Deductions in staying healthy is an advantage

 Staying healthy is expensive. A portion of 7.5% of your AGI for 2018 and 10% for 2019 is the deduction allowed by the IRS specifically for medical expenses. The amount cannot be deducted if your insurance company reimburses you for any part of your expenses. 

Your tax burden can also be at ease when you pay a portion of your money to long-term care insurance. The IRS lets you deduct an increasing portion of your premium as you get older since long-term care insurance is a deductible medical expense, as long as the insurance is not subsidized by your spouse’s employer or your employer.

You have to be keen on holding onto receipts and keeping a file throughout the years because as those expenses add up, they can start to lower your tax bill.

Advanced Accounting & Tax Planning
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