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Top 10 Overlooked Tax Deductions

In this Kiplinger’s Personal Finance article, the IRS indicated that millions of taxpayers overpay their taxes every year by overlooking just one of the money-savers tax deductions listed below:

  1. State Sales Tax
  2. Reinvested Dividends
  3. Charitable Deductions
  4. Student Loan Interest Paid by Mom and Dad
  5. Job Hunting Costs:
  • Food, lodging and transportation if your search takes you away from home overnight
  • Cab fares
  • Employment agency fees
  • Cost of printing resumes, business cards, postage and advertising

(Job-hunting expenses incurred while looking for your first job do not qualify.)

     6.  Moving Expense to Take Your First Job
     7.  Child-Care Credit       
     8.  Military Reservists’ Travel Expenses
     9.  For the Self-Employed: Deduction of Medicare Premiums

10.  Estate Tax on Income in Respect of a Decedent – This sounds complicated, but it can save you a lot of money if you inherited an IRA from someone whose estate was big enough to be subject to the federal estate tax.  Basically, you get an income tax deduction for the amount of estate tax paid on the IRA assets you received.  Let’s say you inherited a $100,000 IRA, and the fact that the money was included in your benefactor’s estate added $45,000 to the estate tax bill.  You get to deduct that $45,000 on your tax returns as you withdraw the money from the IRA.  If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized deduction on Schedule A.  That would save you $6,300 in the 28% bracket.

 If you have any questions regarding these deductions, or think you are entitled to one of the deductions listed above, please contact us. 

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1 thought on “Top 10 Overlooked Tax Deductions”

  1. Tax Accountants in New York says:
    August 23, 2012 at 8:15 pm

    This post is very informative! I would also like to point out to readers that if you do excessive traveling for work that is not your physical place of business where you spend most of your time, those travel expenses are also deductible in some states. My old job had an office in Long Island and Brooklyn and when I contracted one of the tax accountants in New York, he advised me I could be reimbursed for my money spent. Who knew?

    Thanks for sharing and allowing me to contribute!

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