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5 commonly overlooked tax deductions

On Behalf of | Feb 6, 2017 | IRS Issues

Tax forms have all been mailed, and the deadline for filing starts to loom for many people. As you prepare to file your 2016 taxes, your goal is to limit your obligations to the government and maximize a refund if you are getting one. Every year, millions of American miss tax deductions that should reduce the amount they owe the government without realizing it.

1. Donations for charitable giving

Any money or items you donated to charity may be able to be itemized on your tax filings, resulting in decreased payments or increased refunds. If you cleaned your house out and dropped your old items off at a charity organization such as Goodwill, those goods may be deductible on your tax return. Always keep a receipt if you plan to write things off to avoid problems in an audit.

2. Fees and tuition for school

That is right. If you are working toward a degree, you may be able to write off your tuition and fees related to school. If you are a parent that is paying for a dependent’s education, this applies to you. Even just taking one class can ensure that you get the deduction that may be up to $4,000 depending on your situation.

3. Deductions for earned income

Those who earn lower income from their jobs may be eligible for a refundable tax credit known as the earned income tax credit. Filers can be refunded several thousand dollars if they qualify. The amount depends on your dependents and your total income, but this exemption is missed by one in five tax filers.

4. Searching for a job can reduce your taxes

If you fell on hard times last year and spent time looking for a new job, you may also be able to deduct any costs you accrued while searching for a job. This may include travel related to the job search, expenses related to creating and sending resumes and any fees you paid to placement agencies during your search.

5. Losses from gambling may increase your refund

If you did not have a lucky year gambling, you may be able to make the most of it and claim gambling losses on your itemized tax deductions. This is only in cases where your losses were less than your winnings, and your winnings are considered taxable income. Keep detailed, accurate records to avoid confusion.

Tax laws and deductions are complicated and easily overlooked by the average filer. If you are facing an audit and are concerned about your tax filings, consult an attorney immediately.