When it comes filing tax returns, we need to follow the standard process of filing the return with accuracy. Mistakes in filing a tax return could lead to confusions, and you can even be penalized. So, you always have to be careful with this process. Not just filling up the form with accuracy, you have many other things to do. For example, understanding the deductions is the most important thing. Every taxpayer is entitled to enjoy some deductions in some scenario. These deductions are important, as they help to enhance your nontaxable income. Increase ion nontaxable income gives you more saving or spending opportunities.
Certain deductions are known to everyone. On the other hand, certain deductions are not known to everyone. In the following section, we shall mainly discuss those deductions which are lesser known to others. These are the top deductions that even IRS does not want you to know. They should not be overlooked, as they can save your money which you can save for your better future.
1. Deduction for Your Home
Being the owner of a home is always a great feeling. It is important for the security of your family and also important to live a lavish lifestyle. If you are a homeowner, you are probably eligible for some tax deductions which you do not even know. Owning a home can help you to write off a sizable amount of your taxes every year. Deductions are there on many things for making it easier for the homeowners, especially those who have purchased home with a mortgage. You can claim deductions on your mortgage interest. Furthermore, deductions can be claimed on the mortgage insurance premiums that you pay on a monthly or yearly basis.
Every homeowner has to pay property tax to the government. The property tax also comes into your tax deductions. The government would not tax you two times, and that is why property tax will be calculated as a deduction. So, when you are filing your tax return, you should not forget to write off property taxes as deductions.
2. Tax Deduction from Car’s Sales Tax
Not just owning a home, but also owning a car can make you eligible for tax deductions. The particular deduction can come on the sales tax that you pay for your car. However, the matter is a little complicated here. In the USA, not all states allow tax deductions against the sales tax of your car. It is allowed by only a few states. So, before claiming a deduction, you need to check the tax policies of your state. Generally, the states that determine taxes according to the price of your car are generous to give tax deductions against the sales tax.
3. Charity Is Eligible for Deductions
If you invest in charitable funds, you can avail tax deductions. However, there are certain criteria in this matter. First of all, the charitable fund has to be government recognized. Nevertheless, charity at the personal level will not be counted in this matter. For example, you give money to a jobless person. Though it is a form of charity, it will not be considered as eligible for tax deductions.
4. Deductions on Your Medical Expenses
We consume two types of medicines. Certain medicines are required in the emergency situation, and they are consumed for a small span of time. Certain medicines are there, which have been prescribed for a longer period of time. You may have to consume such medicines on a daily basis for a long time. For example, high blood pressure patients may have to consume medicine on a daily basis for a long period of time. In both cases, you can claim deductions against your medical expenses. However, there is a certain limit for claiming deductions on the tax return in this regard. If you have gone for personal loans to cover medical expenses, you could also get additional deductions. Paying loans timely is important, and that is you need to learn debt consolidation tricks. You can consolidate your all debts with the help of experts from Nationaldebtrelief.com.
5. Damage or Theft on Income Producing Property
Those, who have offices, often stay concerned about the safety or security of their commercial place. They make certain investments to enhance the security of the place. However, accidental damages cannot be stopped. Nevertheless, theft or burglary cases can also lead to property damage. You can claim a deduction on your taxable income in case if you have incurred losses on a revenue fetching property.
6. Gambling Losses
Believe it or not, you can claim tax deductions against the loss of money into gambling. Although gambling is not really encouraged, people often do not mind to try their luck. Sometimes it works, and sometimes it does not work at all. In case of small losses in gambling, we do not mind about tax deductions. But, when someone loses a hefty amount of money into gambling, tax deduction would come to him or her as much-needed relief.
7. Reinvested Dividends
If you use to invest in mutual funds, you should know that tax deduction is there in your reinvested dividends. If you have dividends that automatically invested in extra shares, it will reduce your amount of taxable capital gain. At the end of the day, this deduction will help the investors to save a good amount of money.
8. Moving Expenses for the First Job
You would be surprised to know that you can claim a deduction on your moving expenses for the first job that you are going to pursue. It should be the first ever registered job for you otherwise you would not be counted as eligible for the deductions. To claim the deduction, you need to show valid documents for all the expenses that you have done in this regard.
9. Earned Income Tax Credit (EITC)
Many people do not know that they can get a tax deduction for the EITC. According to the survey, more than 25% people do not claim such deduction as they are not aware of it. Many people do not claim, as they find credit rules are too complicated.
10. A portion of Education Fee for Your Child
A certain portion of the education fee of your children can be considered as tax deductible. Generally, the tuition of the institution has been regarded as the qualified amount for tax deductions.