Although you only file your taxes once a year, it is a good idea to keep these items in mind throughout the year. These can all be claimed as deductions when filing time comes around. The list of little known deductions is long and while some of them may not seem like much of a break, when they are all added together, you may find your tax liability is less and your refund is more.
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Energy Savers and Alternative Fuel
Starting in 2006, tax deductions for energy saving appliances, home remodelling projects and repairs, and even vehicles began offering substantial deductions that can be claimed on your taxes. Install an energy-efficient or solar water heater or buy a new dishwasher with an Energy Star label? How about a vehicle that operated on alternative fuel or electric? These items can all be claimed as deductions.
Other items to save receipts for include washers, dryers, heating and air conditioning units and systems or refrigerators. Deduction amounts and requirements needed to claim these purchases may vary from year to year, so be sure to save all purchase and warranty information.
These deductions are further explained and can be claimed on IRS form 5695.
It is common information that deductions for medical insurance premiums can be a deduction but are you aware that your prescription medications, as well as any over-the-counter medicine your doctor deems necessary for your health are also deductible? If your physician deems it necessary that you take an aspirin every day or supplement your diet with vitamins, those costs are allowable deductions.
Medical aids you must purchase may also be claimed on your taxes. Perhaps a broken leg required that you purchase crutches or rent a wheelchair. Most all devices required for your health and well-being can be claimed. IRS Publication 502 offers a lengthy list of allowable medical and dental items that can be claimed, as well as the criteria needed to be able to claim them.
Other items that may surprise you are out-of-pocket costs for the chiropractor, dentures, wigs due to hair loss from a disease, nursing home costs, and eyeglasses or optometrist fees and costs for exams.
Vehicle Related Deductions
Most people not only spend hours on a daily basis in their car; they also depend on it not only for personal matters, but to take care of business and medical needs, as well. While you cannot claim the costs of personal use as a deduction, there are a number of deductions that can be taken for charitable, medical and business reasons.
Mileage rates in 2010, were 50.5 cents per mile, which can add up to a small fortune over the course of a year with this deduction. You can claim mileage to and from medical or dental visits, physiotherapy, and other medically necessary appointments. You may also claim mileage if you are a part-time employee with two jobs. Remember that only the miles from your first job to the second one can be claimed, though.
Do you make regular trips to Goodwill or the Salvation Army to drop off charitable donations? The mileage to the donation station can be deducted as a charitable donation. Keep a small notebook and track that mileage. You may be surprised at the total on Dec. 31!
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