Four Tax Deductions You Had No Idea Existed
What you don’t know can hurt you, especially when it comes to taxes.
The onus is on you to find all the deductions you can and claim them.
Here’s a look at four commonly overlooked tax deductions.
1. Kids’ Summer Camp
Daycare isn’t the only type of childcare deduction you may be eligible for.
“If you’re a parent of a child under the age of 13, then you might already know that you’re allowed to claim a credit for money you spend on childcare while you’re at work,” says Joshua Zimmelman, president of Westwood Tax & Consulting. “But, you might not realize that summer camp costs also qualify.”
2. Volunteering Costs
You can deduct any monetary donations you made to eligible charitable organizations, and noncash donations of goods are also deductible. Know, too, that you can deduct expenses you incur while volunteering, including gas for mileage driven or other transportation costs.
“You can’t deduct the time you spend volunteering,” Zimmelman says.
Consider using a standard mileage rate of 14 cents a mile to calculate your vehicle deduction for miles driven in service to a charitable organization. For instance, you can deduct mileage for driving to a shelter to serve meals to the homeless. Parking fees and tolls are deductible, too.
3. Certain Animal Expenses
It’s probably not news that both visually and hearing-impaired people can deduct expenses for purchasing, training, and maintaining a guide dog or other service animal.
“What sometimes goes under the radar is that you can deduct the expenses of an emotional support animal, if you can prove it was purchased and used primarily because of a specific mental illness or disorder that the animal can aid in treating,” notes Ryan Bayonnet, a certified financial planner and enrolled agent with Hyland Financial Planning.
You may be able to deduct the expenses of an emotional support animal, or the costs for fostering a dog or cat. Furthermore, if you foster a cat or dog for an animal-related 501(c)(3) organization, you may be able to claim some related expenses. Unreimbursed out-of-pocket spending on things like food, medicines, veterinary bills, crates, and garbage bags are all deductible according to Abby Eisenkraft, author of 101 Ways to Stay Off the IRS Radar.
4. Home Sales and Changes
If you’ve sold your home at a gain, you may exclude up to $250,000 of the gain from your income if you’re single or up to $500,000 if married filing jointly. It must have been your main home during at least two of the last five years. When calculating the gain on your home, determine the difference between the proceeds of your sale and your basis. Your basis includes what you originally paid for the home, plus any improvements you made. (Improvements include big items such as an addition and smaller items like a fence.)
“You can also add to the basis the agent’s sales commission and some settlement fees and closing costs such as legal fees, recording fees, and survey fees,” says Melinda Kibler, a certified financial planner and enrolled agent with Palisades Hudson Financial Group. “Keep clear records to substantiate your basis in case the IRS ever audits you.”
You can also claim a deduction for retrofitting your home for a disability — say, putting in ramps, widening doorways, installing railings, or modifying cabinets.
“Know, too, that if your doctor has written a prescription that you must swim for exercise or recovery that with proper substantiation your pool may be deductible, along with the costs to operate it,” Eisenkraft says.
Source: dealnews