6 Great Tax Deductions You Might Not Know About!
Most people dread the April 15th tax filing deadline every year. No one likes having their hard-earned money taken by the government. However, there are many ways to reduce your annual tax liability. Check out these six commonly missed tax deductions that could save you thousands!
1) Health Insurance Premiums
Healthcare expenses continue to rise, and more people are becoming eligible for this deduction. For most people, the expense has to exceed 10.0% of your adjusted gross income before you can itemize it. However, if you are self-employed, you can deduct 100% of your insurance premiums, which comes off your AGI rather than being another itemized deduction.
2) Charitable Gifts
Most people know they can deduct contributions to qualified non-profit organizations. However, the charitable gifts category does not stop there. For instance, if you donate something you make, like cookies for a bake sale, you can itemize the cost of those goods as well. Do you travel to volunteer for your charitable cause? Keep track of that mileage because you can deduct that as well, and we all know how quickly those miles can rack up! Just be sure to keep receipts and mileage logs in case of an audit.
3) Babysitter Tax Break
Speaking of charitable donations, did you know that if you pay for childcare while volunteering for a qualified non-profit organization that can be itemized as well? Just be sure to keep a record of your volunteer activities and the amount you paid the babysitter. Now, how about giving your babysitter a little raise?
4) Teacher Tax Credits
We all know how valuable teachers are to our children’s development and success. However, what may escape most of us is that most teachers have direct out-of-pocket expenses in order to do their job most effectively. Thankfully, the IRS has recognized this, and provided a deduction of up to $250 for qualified purchases for K-12 educators, and you do not have to itemize your deductions to take advantage of this tax break!
5) Looking For Work
It is estimated that the average adult will now change careers seven times during your working life. Whether these changes are by choice or by force, you can still benefit from looking for a new job. The expenses must exceed 2% of your gross income, but can include both out-of-pocket expenses like printing and mailing resumes, as well as mileage and travel expenses for interviews.
6) Self-Employed Social Security
One of the headaches of being self-employed is the 15.3% social security tax that covers what both you and an employer would pay in a “traditional” employment situation. The good news is that you can deduct the 7.65% that would normally be paid by an employer from your income taxes.