Every year, taxpayers inadvertently leave money on the table by overlooking deductions that are rightfully theirs for the taking. The tax code actually offers many legitimate deductions that are IRS-approved and yours for the taking — as long as you claim them. So when tax season rolls around, be sure you’re getting every penny you deserve.
Mortgage interest
If you own a home and have a mortgage, you can deduct the interest you pay on that loan. When you’re in the early years of your mortgage, your savings can be substantial as the majority of your payments go toward interest. And depending on where you live, you may be able to deduct state and local taxes, including property taxes, which can further reduce your tax liability.
Mortgage points
When you take out a mortgage, you may pay “points” — an upfront fee that lowers your interest rate. These points are usually tax-deductible in the year they are paid, even if you don’t itemize.
Home sale costs
Selling your home? The costs associated with the sale, such as real estate commissions, title insurance and legal fees, can be used to offset the capital gains tax on the sale. This helps reduce your overall tax burden.
Home office deduction
If you use a portion of your home regularly and exclusively for business purposes, you may be able to deduct your direct and direct expenses of running a business from your home office, including rent, utilities, insurance and other home-related expenses. Does your home fit the bill? Find out.
Continuing education and professional development costs
Are you or your dependents pursuing higher education? This deduction covers qualified education expenses for eligible students, allowing you to deduct up to $4,000 of qualified expenses, such as tuition and fees. Parents may also deduct interest payments on certain student loans from qualified lending institutions.
Ongoing training and education related to your current job may also be tax-deductible, even if your employer doesn’t reimburse you. As long as the training maintains or improves your job skills, it can qualify.
Medical and dental deductions
Medical and dental expenses that aren’t reimbursed by your insurance may be deducted to the extent your annual total exceeds 7.5% of your adjusted gross income. But to qualify for medical deductions, you must also itemize. When adding up your medical costs, be sure to include the cost of traveling to your doctor or medical facility for treatment, including your out-of-pocket expenses for gas, oil, repairs, parking and tolls.
Long-term care insurance is also a deductible medical expense. As long as your employer or spouse’s employer doesn’t subsidize the insurance, you may deduct an increasing portion of your premium as you age.
Legal and professional fees
Did you know that fees paid to lawyers, accountants, financial advisors and other professionals can sometimes be deducted? This can include the cost of tax preparation, estate planning and even consulting for starting a new business.
Don’t leave money on the table
The professionals at Magone & Company can help you navigate the deductions and tax credits your entitled to claim. Call us today at (973) 301-2300.
This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your tax situation.