Tax season is upon us, and if you’re like most people, you probably don’t know everything there is to know about the ins and outs of tax forms and supplementary material. Ain’t nobody got time for that!
This year, Americans will pay $4.85 trillion in federal, state, and local taxes. You can bet that a pretty hefty portion of that money will be paid in error. To help you ensure you’re writing off everything you can (and nothing you can’t), here are some of the lesser-known facts about tax write-offs.
1. For write-off purposes, your contributions to public charities, colleges and religious groups can’t exceed 50% of your Adjusted Gross Income (AGI). When it comes to gifts of appreciated property, the limit drops to 30% of your AGI. Deductions over this limit will carry over into the following year.
2. To write off any cash contributions, no matter how small, you need a canceled check, bank record, or a receipt with the charity’s name and donation amount. Having the charity’s Tax ID number on the documentation is also handy.
3. Instead of trying to sell your old car, donate it to a charitable organization. You’ll receive a guaranteed tax deduction for the value that the charity sells it for (if they sell it) and for its Blue Book value (if they don’t).
4. Donating used items like clothing, electronics, and furniture earns a write-off for the item’s fair market value at the time you donated it, which is probably less than what you originally paid.
5. To ensure you can write off what you donate, give your items to a qualified organization — an organization that has a tax-exempt status with the IRS. You can ask for documentation, or check IRS Publication 78, Cumulative List of Organizations, which lists most qualified organizations.
6. Many job hunting expenses are deductible, like the costs of printing and sending resumes, or money spent on recruitment services. You can also write off your travel expenses for job interviews, such as plane tickets and baggage fees.
7. Similarly, the Lifetime Learning credit can provide up to $2,000 per year, taking off 20% of the first $10,000 you spend for education after high school in an effort to give you new or improved job skills.
8. If you’re self-employed and responsible for your own health insurance coverage, you can deduct 100% of your insurance premium.
9. If you perform volunteer work, you can write off anything you pay out-of-pocket for supplies, uniforms, stationery, stamps, parking, and travel. However, the value of the work itself is not deductible.
10. Other legal deductibles include union dues and professional memberships, professional or work-related publications, mortgage insurance premiums, professional tax preparation fees, and any state taxes you paid last year.
If you’re up for a bit of heavy reading and want to find out more, you can peruse the IRS’s Credits and Deductions site for more information.
Have you thought of something useful that I didn’t include here? Leave a comment below!