Tax return preparation is very difficult for most people even if you are going to a trained professional like my self. Often deductions are missed simply because the taxpayer has not thought of them and the tax preparer has not asked. Here is a list of the most commonly missed tax deductible items.
1. Medical mileage deduction for 2008 is $.19 and it was $.20 per mile for 2007. The number of miles from home to doctor appointments and hospital appointments need to be included. When you start adding these up it is amazing how much it totals to.
2. Interest paid on a 2nd mortgage is deductible as long as the residence has a function kitchen and bathroom. Have you ever considered your motor home in this hidden tax deductible item?
3. Charitable donations are often overlooked since we do this out of the kindness of our hearts. But when it comes tax time sit down and figure these up. Include donations to Deseret Industries and vehicles donated to different foundations.
4. Expenses incurred during a move that is job related are a tax deductible item. Ask your tax preparer about this one as there are certain tests to be satisfied. If you qualify include expenses for transportation and storage of household goods. Also travel including lodging from your old home to your new home is deductible.
5. Deducting alimony can provide an annual tax reduction of $3,360 per year assuming $1,000 paid per month and you are in a 28% tax bracket. Do not pass this one up as the alimony is also taxable to your ex.
6. Interest for loans to pay education expense are a deduction. With graduation comes so many changes and mail gets lost and misplaced or just does not get forwarded. Take advantage of this deduction by being sure you know how much interest was actually paid for the year.
7. State income taxes that are withheld on your W-2 are deductible. In addition, do not forget the amount of taxes paid to your state for a prior year filing.
8. Personal loans you have made to family and friends who have not repaid you are deductible. The IRS does not require you to take these people to court to be able to take this deduction. If you have capital gains and are looking for a way to off set them this deduction can be golden.
9. Losses from business endeavors will be covered in other articles but for the present let me just say do not be timid to take losses on line 12 of your 1040 which arise from self employment. If your venture was intended to turn a profit then you should be taking the deduction.
10. Rental income from a family member is usually unreported because we want to beat the system. First this is illegal but second you are missing out on a very large tax deductible item.
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