You could fill a fat book with often-overlooked tax breaks — in fact, many such guides jockey for shelf space at bookstores throughout...
You could fill a fat book with often-overlooked tax breaks — in fact, many such guides jockey for shelf space at bookstores throughout the tax season.
Here are dozens of deductions, credits and other tax-saving ideas that could be worth exploring more deeply.
• Excess payroll deductions for state disability insurance if you held two or more jobs.
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• Job-hunting expenses if you sought work in your current occupation.
• Labor-union dues.
• Education expenses required by law or your employer.
• Moving expenses.
• Protective clothing required at work.
• Teachers may deduct up to $250 spent on books and classroom supplies.
• Transit passes and parking fringe benefits may be tax-free perks, not income.
• Cellphones used for the convenience of the employer.
• The child tax credit is $1,000, for kids 16 and under.
• Up to $4,000 in college tuition and fees under the higher-education tax deduction.
• Up to $1,650 of college tuition and fees under the Hope credit, or $2,000 under the lifetime learning credit.
• Working single parents and families in which both parents work are eligible for the child and dependent-care credit worth up to $2,100.
• Parents can claim a credit for up to $11,390 of adoption expenses.
• Appraisal fees for charitable contributions and casualty losses.
• Appreciation on goods donated to a charity.
• Legal fees stemming from collecting or obtaining alimony.
• The earned-income-tax credit is worth up to $4,716.
• Interest payments on student loans can be deducted from gross income.
• Alimony payments.
• Couples can file a joint return for the full year even if they wed Dec. 31, 2007.
• The savers credit is worth up to $1,000 for low-income taxpayers who stashed at least $2,000 in an IRA or retirement account.
• Fees for a safe-deposit box that holds stock or bond certificates.
• Investment-advisory fees.
• Write off securities that became worthless in 2007.
• Up to $3,000 of capital losses that exceed your gains.
• Up to $4,000 in contributions to an IRA and $15,500 to a 401(k), plus more for “catch-up” contributions if you’re 50 or older.
• Leftover Alternative Minimum Tax credit triggered by misplayed stock options.
• Choose between a credit or a deduction for foreign taxes withheld by mutual funds that earn dividends outside the United States.
• Interest on savings bonds may be tax-exempt if spent on certain education expenses.
• Contact lenses, glasses, hearing aids, laboratory work and some hospital services.
• Doctor-prescribed weight-loss programs and stop-smoking classes.
• Prescription contraceptives, a vasectomy or, in the event either failed, childbirth classes.
• Certain long-term-care insurance premiums.
• Up to $5,650 in contributions to a health-savings account.
• Private-school tuition for deaf, blind or dyslexic children.
• Certain mortgage-insurance premiums.
• Commissions and closing costs from the sale of a property.
• Mortgage-prepayment penalties and late fees.
• Points on a mortgage and certain refinancings.
• Points paid by the seller of a home.
• Real-estate taxes resulting from the sale or purchase of a property.
• A legitimate home-office allows you to deduct mortgage interest, real-estate taxes, utility bills and other expenses, and potentially the cost of driving to work sites.
• The self-employed can deduct 50 percent of self-employment tax and health-insurance premiums.
• Self-employed taxpayers with children may qualify for the employer-child-care contribution credit if they have no employees.
• Charitable contributions sometimes can be written off as advertising.
• Some travel bills can be deducted if you spent part of a business trip on vacation.
• Life insurance, retirement- plan benefits, transportation perks and other fringe benefits can be deductible if you hired your spouse.
• Tax-preparation fees and audit representation.
• A deduction or credit for income taxes imposed by a foreign country.
• You may deduct state and local sales tax on your federal return if you forgo deductions for state and local income taxes.
• You may be able to claim a credit on your state return if you also paid income tax in another state in 2007.
• An alternative minimum tax credit left over from a previous year could reduce your regular tax this year.
• A portion of vehicle-license fees.
• Mileage and out-of-pocket expenses related to charitable activities.
• Gambling losses that are offset by winnings.
• Theft or embezzlement losses.
• Attorney fees and costs in discrimination lawsuits can be deducted from gross income.
Sources: “J.K. Lasser’s Your Income Tax 2008,” “The Ernst & Young Tax Guide 2008” and Spidell Publishing