Updated July 2018
We all love saving money right? Especially when it comes to taxes! Here is a list of a few federal tax deductions and tax credits that you might have missed out on last year that you might be able to take advantage of.
Commonly Missed Tax Write Offs
Standard Deduction
This depends on your filing status but has been increased so many individuals will not have to itemize. The numbers are as follows:
- Single: $12,000
- Married filing jointly: $24,000
- Married filing separately: $12,000
- Head of household: $18,000
If your income exceeds these numbers, then you will need to file taxes this coming year. If you’re eligible for the alternative minimum tax exemption (AMT), individual exemption is $70,300; married filing jointly is $109,400; and married filing separately is $54,700.
Housing
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Selling your homeIf you sold yours for a profit, you can exclude up to $250K for single filers and $500K for married filing jointly
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Mortgage interest
If you itemize, you can deduct interest paid on $1 million or less for single filers and interest on loans up to $500K for married filing jointly
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Mortgage insurance premiums
Qualified mortgage insurance is treated as tax-deductible, and this has been extended. However, this doesn’t matter unless you have more itemized deductions than your standard deduction, which won’t be too many folks anymore.
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Moving expenses
If you’re moving for a job, traveling, the cost of moving your things, and lodging are tax deductible at a rate of 19¢ /mile IF you pass:
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IRS distance test
Your new commute must be 50 or more miles more than your previous commute, and
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IRS time test
You must be full time at the new job location for 39 weeks of the first 12 months after you move.
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Home renovation deduction
Only when for medical purposes and when they do not increase the value of your house.
Bad debt
If you lent money you never got back, and you have proof that you tried to get it back and there’s no chance of getting it back, you may be eligible for a tax refund.
Charity ( ← click for tax deduction-eligible charities)
- Volunteer work: some expenses incurred from doing charity work can be deducted, like vehicle expenses (14¢ /mile is an easy calculation for this), as well as uniform purchase/maintenance (dry cleaning), and parking.
- Cash donations up to 50% of your adjusted gross income (must have proof of this).
- Non cash: if itemizing, deduct the amount you would have sold the items for. If donating larger items such as a car, ensure it is to a qualified charity – 501(c)(3).
Retirement
- Early withdrawal of retirement funds: penalties from this withdrawal might qualify as a tax deduction.
- Retirement fund contributions: (unless you have a Roth IRA) standard IRA and 401(k) contributions can be written off.
Taxes
- Previous year’s additional taxes: if you owed additional taxes from a previous year and paid them in 2016, you might be able to deduct these.
- Other taxes paid: you may itemized other taxes you’ve paid like
- State and local sales tax (OR state and local income tax – cannot deduct both)
- State and local property tax
- Foreign, state, and local real estate tax
- Foreign, state, and local income tax
Family
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Medical and dental expenses
For your spouse and dependents after they exceed 10% of your adjusted gross income. If you or your spouse is 65 years or older, you can deduct when they exceed 7.5%.
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Alimony
If you paid in 2016 as part of a divorce or separate maintenance decree. Payments qualify if:
- They’re not for child support
- You’re legally separated and do not live together
- It went to your spouse or former
- You and your spouse or former file separately
- You paid with cash, check, or money order
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HSA contributions (health savings account)
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Dependent care flexible spending account
You may put $5,000 of pre-tax money here each year for the care of children, disabled spouse, parent, or other mentally or physically handicapped dependent.
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Personal and dependent exemptions
For 2016 this is $4,050 for each person. This is phased out depending on how much you make and how you file. Click here for more detail on this.
Investments
- Fees to collect interest and dividends
- Investment fees paid to manage your investments
Self employed health insurance
If you were self employed in 2016, premiums are deductible for medical, dental, and long-term care insurance.
Legal fees
When itemizing, these can be deducted if they have to do with doing or keeping your job, or fees for tax advice, but only if they are 2% of your adjusted gross income.
Gambling losses
If you have winnings, which must be reported, you can deduct losses up to the amount of winnings reported (but you must have proof of the loss). Sorry you cannot deduct losses if you haven’t reported winnings to offset them!
Home, vehicle, and household item losses not covered by insurance
Military service travel
If traveling lover 100 miles for service, travel expenses (such as transport, meals, lodging) may be deducted.
Work uniforms
Business use of your home and car
Business travel expenses
Must not be “extravagant”: eg. transport, baggage fees, meals, lodging, laundry.
Tax Credits
Go to the IRS website to see these in full detail. Be aware that the amount you’re eligible for depends on your income level. There are various opportunities available, from the child tax credit to adoption, to elderly care. Education, credit for having energy-efficient technology for your home, to owning low income housing.
Click here to find your tax refund if you’re expecting one: Tax Return Tracking
If you need help filing taxes this year, or would like someone to sit down with you and help you keep more of your hard earned money, contact D&M Accounting, a Menomonee Falls local accounting firm. We’re ready to help you wherever you may be located, individuals and businesses alike.
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