It's a pretty good feeling to get that tax return check in the mail, but a pretty bad one to realize you forgot to include a tax deduction that would have lowered your tax bill or increased your returns. With the ever increasing complexity of the tax laws, filing taxes just gets more and more complicated. To help simplify things, we assembled a list of some of the most commonly overlooked tax breaks you should take advantage of.
State Sales Tax
Few people know that an option exists that allows you to deduct sales taxes or state income taxes off your federal income tax. In a state that doesn't have its own income tax, this can mean major savings. When filing taxes, itemizers have the choice between deducting the state income taxes or state and local sales taxes they paid. If your state doesn't have an income tax, the sales tax write-off will decidedly safe you the most money.
While most taxpayers probably know that you can write off major charitable donations, many don't know that you can also write off smaller ones. Additionally, it's possible to write off expenses paid out of pocket that allowed you to spend time working for charity, such as hiring a babysitter for your children so you can volunteer at a soup kitchen. Or, if you drove your car to charitable activities, you can deduct 14 cents per mile, plus parking and tolls paid.
Unusual Business Expenses
It may seem obvious that you can write off the cost of business expenses, but you may not know how many different kinds of business expenses that includes. As Turbotax points out, "A junkyard owner, for example, might be able to deduct the cost of cat food that encourages stray cats to hang around and keep the mice and rats away. A bodybuilder got approved to deduct the body oil he used in competition."
Health Insurance Premiums
Health care is expensive, and only getting more expensive. Luckily, the IRS takes this into account. Deductible medical expenses have to exceed 10 percent of your adjusted gross income (AGI) to be claimed as an itemized deduction in 2019, but if this is true of you, you're looking at some major savings.