Member Education & Consumer Tips
Commonly Overlooked Tax Deductions
With tax season in full swing, don't overpay by overlooking possible deductions. See below for some of the most common errors taxpayers make on their tax returns.
- Charitable contributions
You can write off out-of-pocket costs you incur while doing good deeds, such as ingredients for casseroles you regularly prepare for a nonprofit organization’s soup kitchen or the cost of stamps you buy for your school’s fundraiser. - Student loan interest paid by parents
If Mom and Dad pay back the loan, the IRS treats it as though they gave the money to their child, who then paid the debt. So a child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by their parents. - Moving expense to take first job
Job hunting expenses incurred while looking for your first job are not deductible, but moving expenses to get to that first job are. If you moved more than 50 miles, you can deduct the cost of getting yourself and your household goods to the new area. - Military reservists' travel expenses
If you are a member of the National Guard or military reserve, you may earn a deduction for travel expenses to drills or meetings. - Child care credit
It’s easy to overlook the child care credit if you pay your child care bills thorough a reimbursement account at work. Up to $6,000 can qualify for the credit, but the old $5,000 limit still applies to reimbursement accounts. - Estate tax on income in respect of a decedent
If you inherited an Individual Retirement Account (IRA) from someone whose estate was large enough to be subject to the federal estate tax, you basically get an income tax deduction for the amount of estate tax paid on the IRA balance. - State tax you paid last spring
If you owed tax when you filed your 2007 state tax return in the spring of 2008, remember to include that amount with your state tax deduction on your 2008 return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments. - Mortgage refinancing points
When you buy a house, you get to deduct the points paid to obtain your mortgage in one fell swoop. When you refinance a mortgage, however, you have to deduct the points over the life of the loan.
Source: TurboTax.com
