It seems to happen to everyone: they prepare their tax return, put in every IRS tax deduction they can think of and file their return. Ten days later, someone tells them about some tax deduction that they could have taken advantage of if they had only known about it. And they are kicking themselves for the next 12 months. Here are a few deductions that everyone should know of but don’t.
Let’s start with charitable donations. Everyone knows that these contributions offer a great opportunity for deductions. What many people don’t know is that if you use your credit card to make a contribution, you still get to claim it as a deduction in the year in which you charged your card. The year in which you actually end up paying the bill for the charge doesn’t matter to the IRS. All you need to do is to get a receipt from whatever charity you made the contribution to. How about when you can give stuff away – clothes, appliances, an old car, anything at all – to charity. You get to claim a deduction on these? You certainly do. You just need to get a receipt for all non-cash contributions from the charity you gave them too. You do need to make sure that you don’t give away trash though. Everything you give needs to be in reasonably good shape. Even if you forget to get your receipt, you can still claim the contribution. You may not be able to prove it if you are audited; but it’s hardly a crime that you’re committing.
Interest rates have kept falling over the years and lots of people have been going in to get their homes refinanced. Repeatedly. Whatever points you pay to refinance your home is a deductible. Let’s say that in July of last year, you chose to refinance your mortgage for a period of 10 years. Of those 120 months, six months will exist in last year alone. You can proportionately deduct whatever points would apply for those six months.
Whatever health insurance premiums you end up paying through the year make for great deductions. But only if you add these to your medical expenses, and the whole thing goes above 7.5% of your adjusted gross income. If you are self-employed, in business for yourself, and there is no employer paying your insurance premiums, you get to deduct every cent that you pay for your health insurance. The great part is, that you don’t need to itemize this.
Any home improvement that you spend on with a view to achieving energy savings, gives you an IRS tax deduction. Install a pigmented roof, skylights, a central air-conditioning unit or a better furnace, and you get a 30% credit – as long as it’s no higher than $1500.