YOUR MONEY: Five Tax Deductions Not to Overlook
Thursday, February 26, 2015
Did you accumulate expenses searching for a new job in 2014? Did you use your car while helping out at a soup kitchen? Are you a self-employed person who paid Medicare premiums out of your pocket? If so, you might be eligible for one of the many tax deductions that people often fail to take. The New Jersey Society of Certified Public Accountants (NJCPA) provides details on frequently missed deductions that you should not overlook as you prepare to file your taxes this year.
#1: Job Search Costs
If you spent money creating and mailing résumés, traveling to interviews or paying an employment agency, you may be able to deduct those costs if you were seeking a job in a field related to your current job. It may also be possible to deduct the costs of moving to take a new job, depending on how far your new workplace is from your old home and how long you work at the new job.
#2: Charitable Contributions
You’re probably aware that you can deduct the cash you give to your favorite cause, but what about donated clothes or the value of miles you used running errands for a charity? However you made your donation, you may be eligible to deduct its value on your return. Your contribution must meet Internal Revenue Service (IRS) requirements, of course, which means, among other things, that you must give to a qualified organization as designated by the IRS and that you should maintain an appropriate record of your contribution.
#3: Some Divorce-Related Costs
If you get a divorce, you generally can’t deduct the related legal fees or court costs. However, there are some divorce-related expenses that may be deductible. You may be able to deduct legal fees paid for tax advice in connection with a divorce and legal fees to get alimony. Alimony paid to an ex-spouse may also be deductible, but child support and noncash property settlements are not.
#4: Certain Educational Expenses
In a fast-paced business world, many people return to school to brush up on their skills or explore a potential new career. If you hit the books in 2014 or plan to do so this year, you should be aware of the Lifetime Learning Credit, which is available to taxpayers throughout their careers. In a nutshell, you can deduct 20 percent of up to $10,000 that you used in any given year for qualified education expenses at an eligible educational institution that helps improve your career. There are income limits on the credit, so check with your CPA for more details.
#5: Breaks for the Self-Employed
Making contributions to a qualified, tax-advantaged retirement plan is always a good idea for any taxpayer, but it’s especially appealing if you’re self-employed. Those who pilot their own ships have a variety of retirement savings options. Don’t miss this chance to lower your taxable income and build a strong foundation for your retirement. As we mentioned, there are also potential deductions for Medicare premiums, and you may also qualify to write off costs for the business use of your home, work-related auto or education expenses, depreciation, and entertainment, advertising or even banking costs.
Your Local CPA Can Help
Are you taking all of the deductions for which you’re eligible? If you’re not sure, turn to your local CPA. He or she can help answer all your tax questions and provide timely advice you can use to make smart decisions about all your financial concerns.
If you don’t have a CPA, you can easily locate one online using the NJCPA’s free, online Find-A-CPA service. Just go to findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.
To find more information on various personal financial matters, visit the NJCPA’s public service website at MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJCPA's free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.
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The Money Management columns are a joint effort of the AICPA and the New Jersey Society of CPAs, as part of the profession’s nationwide 360 Degrees of Financial Literacy program.
Copyright ©2015 The American Institute of Certified Public Accountants.