Overlooked Tax Deductions

Here are some of the most overlooked tax deductions you might not know. There are many of us who forget or never knew about some of the most common tax deductions that could save us money. I found a list from the IRS of the most common mistakes people make on their returns. The common mistake is not entering your social security number that identifies us to the IRS computer.

There are around 46 million of us that itemized deductions on our 1040 claiming 1 trillion dollars worth. Millions of taxpayers have overpaid taxes. Below is a list of the most overlooked tax deductions

Student loan interest paid by parents. A child who's not claimed as a dependant can qualify to deduct up to $2,500 of student loan interest paid by mom and dad.

Moving expense to take first job Moving expenses to get that first job if it's more than 50 miles can be deducted for getting you and your household goods there.

Child-Care Credit This reduces your tax bill dollar for dollar. This simply reduces the amount of income that's subject to be taxed.

Military reservist travel expense If you are a reservist, you may deduct travel expenses to drills and meetings. You must travel over 100 miles and be away from home overnight. If you meet certain qualifications, you can deduct lodging and half the cost of meals. You get this deduction regardless if you itemize.

Out-of-pocket charitable contribution Big charitable gifts are hard to overlook but do you prepare food for nonprofit soup kitchens, cost of stamps for fundraisers or drive your car for charity in 2008, you can deduct 14 cents per mile.

Reinvested dividends Is not really a deduction but a subtraction that can save you money. If you have mutual fund dividends automatically invested in extra shares, this increases your tax basis in the fund. This reduces the taxable capital gain when you redeem shares.

State Sales Tax For those of you who live in income-tax states, the income tax is a better deduction. For those of you who don't, the IRS has tables for residents of the states with sales tax showing how much they can deduct. EXAMPLE: If you purchase a vehicle, boat, etc, you get to add the sales tax you paid to what is shown on the IRS tax table for your state. Make sure the sales tax rate you paid does not exceed the State's general sales tax rate.

Estate tax you paid last spring You can get an income-tax deduction for the amount of estate tax paid on the IRA balance that you inherited.

Refinancing points When you refinance a mortgage, you can deduct the point over the life of the mortgage. Example: For a 30 year mortgage you can deduct 1/30th of the points a year.

Jury pay paid to employer Some employers pay full salary to their employees while serving on a jury but ask that you turn your jury duty fees to the company coffers. However, The IRS demands that you report those fees as taxable income.

Please share the most overlooked tax deductions with your family and friends.

For further information please go to www.irs.gov.

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