Posted by Income Taxes and Bookkeeping LLC

What Can I Deduct On My Taxes

What Can I Deduct On My Taxes

The tax filing season is just around the corner, and it officially started yesterday on Tuesday, January, 19, 2016 as announced by the IRS. Tax payers will be able to file their individual electronic tax returns until Monday, April 18, 2016, unlike the traditional deadline, April 15. Like every year, tax payers are in search of expert tax preparers who can efficiently handle their tax deductions and credits in order to pay a minimum amount to the IRS and the government.

With the rise in living costs, one of the best ways to save money and make the most out of your investments is to identify your tax deductions. They are likely to reduce your taxable income but you must keep in mind that you can only qualify for them depending on your current financial situation. Experienced tax filers always keep a track of their operating expenses before filing tax returns and update their tax preparer.

Those who worry about filing tax returns and do not know what to deduct from their expenses must seek help from a credible tax professional, like those at Income Taxes and Bookkeeping located in Winchester, IN. Let’s have a look at a few potential legitimate tax deductions that may reduce your taxable income and help you save in the long haul.  

Advertising and Promotional Costs

Running a business involves various expenses such as sponsoring local events, printing business cards, running advertisements in newspapers, Yellow Pages, and on TV and radio, and various promotional activities. However, business owners can avail a tax deduction on advertising and promotional costs.

Moreover, a website is the online identity of a business which can be costly as well. If you have an online business, you are permitted to deduct its advertising and maintenance expenses and selling costs. In addition, the costs for ‘help wanted’ advertisements and temporary signs also come under tax deductibles.  

Educational expenses

Those concerned about their educational expenses and tuition fee must know that the IRS permits them to deduct up to $4,000  from their school related expenses for themselves, their children, spouse or any other dependent. Not only this, you can deduct up to $2,500 from a student loan with interest. These deductions can lower your overall taxable income.

Moreover, there are two suitable tax credits that can also save you thousands of dollars for your education and tuition fee.

  • The American Opportunity Tax Credit
  • Lifetime Learning Credit

Your tax preparer at Income Taxes and Bookkeeping located in Winchester, IN can guide you about all the other deductions applicable to educational expenses, presented in IRS Pub 970.  

Expenses incurred on Job Hunting

Unfortunately, college students cannot deduct the costs incurred when looking for a job. However, those who are already employed can avail this opportunity. There are several costs which cannot be avoided when you are looking for a job such as the cost of printing and mailing resumes, advertising, phone calls, hiring outplacement agencies, traveling expenses for interviews and many other itemized expenses. But there are certain conditions to qualify for tax deduction on job hunting expenses.

  • Your expenses must exceed of your adjusted gross income (AGI) including other itemized expenses.
  • You must search for a job within the same field or position.
  • You will not be permitted to deduct the expenses if it is going to be your first job.

Besides, you can refer to IRS  Pub 529 or ask your tax preparer to help you in understanding the tax deductions.

Tax Deductions on Medical Expenses

It is really difficult for tax payers to itemize deductions up to of the adjusted gross income (AGI) in order to claim medical and health costs. If your medical and dental expenses exceeded 10% of the AGI during the last year, you can avail tax deduction. There are certain deductible expenses which include the following.

  • Surgeries
  • Preventative care
  • Fertility treatments
  • Doctor’s visits
  • Psychiatrist and psychologist visits
  • Prescription medication
  • Travelling cost for medical care   

Furthermore, you are not permitted to itemize non prescribed drugs or any other health club dues as tax deductibles. Also, you should avoid including any health insurance premiums. If you want to know more details about the itemization of medical expenses then see IRS Publication 502 determining your medical and dental costs.   

Tax Deductions on Charitable Donations

Those who are itemizing their tax deductions on Schedule A, the charitable deduction can help you in keeping your tax bills lower. This may include any tax deductions you made during the last year. But for this you have to make sure that you have evidence to prove your donations such as any text message.

If you have given all your clothes and useful items to the needy or to a charity, then you are permitted to claim a tax deduction on those items. Make sure to get an audit receipt. On the contrary, if you volunteer for a legit organization then you will not be permitted to deduct the expenses, however, you will be able to get your travel expenses deducted which also comes with a limitation of 14 cents per mile. Ask your tax preparer at Income Taxes and Bookkeeping located in Winchester, IN to guide you through IRS  Pub 526.

Other Tax Deductible Items

There are some more items you can deduct from your taxable income. You can take guidance from Publication 535 by the IRS to know whether the items can be deducted or not.

  • Bank fees
  • Licenses and regulatory fees
  • Moving machinery
  • Outplacement services
  • Impairment related expenses
  • Property repairs
  • Repayments of income
  • Subscriptions to trade
  • Utilities

The tax season is almost here and you need to file tax returns. If you feel you need help with understanding the process and the technicalities, then we highly recommend you to visit experts and professional tax preparers at Income Taxes and Bookkeeping located in Winchester, IN.  

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