Unless you are a tax professional, you probably do not spend time trying to keep up with all the deductions and credits that the Internal Revenue Service allows.
Here are four categories that contain deductions or credits that might surprise you.
1. Job hunt deductions
If you were looking for a new job, you probably mailed copies of your resume to various recruiters and possibly paid an employment agency to help with your search. As long as this was not your first time looking for work, you may be able to deduct such search-related expenses. Also, if you land a new job that requires relocation and your pet relocates with you, shipping expenses for Fido or Fluffy may also be deductible.
2. Health-related expenses
Various kinds of health-related expenses may qualify as tax deductions. One example is your participation in a smoking-cessation program. Another is the cost of a weight-loss program that was part of a medical diagnosis for a specific health issue. You can also claim the costs associated with breast reconstruction surgery related to cancer treatment. If you are a new mother, you can claim your pregnancy test expense plus the costs of breast pumps and other related medical supplies.
3. Education tax breaks
Parents with children in college can deduct the student loan debt interest they pay annually. Students who are taking responsibility for their own loan payments should receive a form 1098-E from their lender indicating the amount of interest they paid. There is a deduction limit of $2,500 per year, however.
4. Home improvements
If you have installed a qualified solar water heater or solar electric system in your home, the Residential Energy Efficient Property Credit may apply with a tax credit of 30%, your reward for being an environmentally friendly homeowner. Also, if you did some home improvement work during the year, you can deduct the state sales tax you paid on the building materials.
Trying to keep up with the IRS and obtain all the deductions and credits for which you qualify is not an easy task. Fortunately, you can rely on professionals who know the law and constantly stay abreast of red-flag issues as well as the benefits that are currently available to taxpayers.