Make sure you take advantage of these favorable tax provisions.
No one wants to pay more in taxes than they have to, but the U.S. tax code is so complex that it’s near-impossible to be sure you’ve taken advantage of every tax break you qualify for. Some tax deductions are extremely obscure, but they can also be quite lucrative if you qualify to take them. Below, we’ll look at 12 often-missed tax deductions that can add up to considerable savings.
1. Job search expenses
Money you spend looking for a job in the same line of work as your most recent job can be deducted as itemized expenses. That includes the costs of preparing resumes and other job application materials, fees you pay to professional headhunters or employment agencies, and transportation to and from interviews.
2. Penalties for early withdrawals from bank accounts
Banks often charge early-withdrawal penalties if you take money out of a certificate of deposit before it matures. You’re allowed to deduct those penalties from your income, reflecting the fact that they are generally stated as forfeiture of interest that you’ve already earned. Note that you may not deduct early-withdrawal penalties you’ve paid for taking money out of retirement accounts before reaching age 59-1/2.
3. Driving expenses for charity work
Expenses you incur as part of doing work for qualified charities are tax-deductible. That includes travel expenses, and you can either deduct the actual expenses or take $0.14 per mile that you drive for charity work.
4. Moving expenses
Moving expenses are deductible if you move for work and meet various tests. In particular, you must work full-time for 39 weeks in the 12 months after you move, and the new job must be at least 50 miles farther from your old home than your old job was from home. Deductions include reasonable costs, such as moving vans, storage, and travel to your new home at a rate of $0.17 per mile for 2017. These deductions are available even if you don’t itemize.
5. Alimony
Alimony paid pursuant to a divorce decree is deductible from the tax return of the paying ex-spouse. The receiving ex-spouse must include alimony in their income. This is in contrast to child support and maintenance payments, which offer no tax deduction to the payer and are not included in the taxable income of the person receiving the payments.
6. Health savings account contributions
If you contribute to a qualifying health savings account, then you can deduct the contributions from your taxes up to certain maximums. If the policy covers only yourself, than the maximum deductible contribution is $3,400. For family coverage, the limit is $6,750. Catch-up provisions are also available if you’re 50 or older, boosting the appropriate limit by $1,000.
