Deduction Junction, What's Your Function?
As 2010 draws to a close, many people are looking at their bank accounts and wondering, "Where did all the money go?" If you didn't save as much as you'd hoped this year, your taxes may offer a prime opportunity to take on the New Year with a financial boost. The secret: deductions. Although they may require extra effort to track, deductions can mean a lower taxable income for you, increasing the amount of money you get to keep. Here are a few common deductions that people frequently forget.
- Give and you shall receive. Contributions to charity are some of the most widely publicized deductions, as many organizations utilize it as an incentive for people to donate. But make sure that you have proper documentation. Just because you dropped $200 into a donation jar doesn't mean you can deduct it; you need proof that confirms who the donation was made to and the amount.
- Job search savings. Unemployment over the past few years has hit startling levels. While hunting for a new job is never fun, you may be able to deduct your costs, like travel expenses, accommodations, employment agency fees, and the cost of printing and distributing your resume and other materials. Again, documentation is key. Make sure you keep track of who you met with, dates, locations, etc.
- Doctor driving. Most people are good at keeping track of all of their receipts for medical visits, co-pays, etc., but did you know that your cost of getting there is deductible too? Keep track of your mileage, parking fees, tolls and fares for buses, trains, or cabs–all of them are deductible.
- Improving your castle. Most people know that if you buy a new home, you can deduct the cost of the associated mortgage. But if you take out a loan for home improvements you can usually deduct the interest paid on that loan as well. However, there are specific rules that detail what exactly can be deducted, so do not assume you can deduct everything.
Filing your taxes can be complicated enough without throwing deductions into the mix, but the potential payoff is well worth it. For more information on filing your taxes, deductions and more, check out the new 360 Degrees of Taxes website here.
To see more savings tips, click here. Was this information helpful? What additional methods do you use to gain financial freedom?