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13 often overlooked tax breaks

Friday13calendarsheet (2) Happy Friday the 13th all you brave souls throwing superstitions to the wind!

Since it's also about a month until our tax returns are due, I thought it a good time to take advantage of the date and turn its bad luck reputation on its head by offering a look at 13 ways to change your tax luck.

You might be able to do just that if you can make use of these 13 often ignored tax breaks.

1. Property tax standard deduction
This is new for the 2008 tax year, so technically it's not had the chance to be overlooked. But since it is sort of hidden on the tax forms, there's a good chance that some folks might miss it. It's tucked away on line 39c of the long Form 1040 and line 23c of Form 1040A.

As you probably already know, real estate taxes usually are deducted as an itemized expense. But if you don't have enough eligible deductions to itemize -- that is, they don't add up to more than your standard amount -- then you don't get to use them.

Now, however, homeowners who don't have a lot of mortgage interest and other itemizable expenses to deduct on Schedule A, but who are paying property taxes, can at least make use of all or some of that amount paid.

You can add up to $500 of your real estate taxes paid if you're a single taxpayer, and up to $1,000 if you're married and filing a joint return.

Now for some oldies, but goodies that filers sometimes forget to claim.

2. Many medical costs
No one likes to be sick, but if have enough ailments during the year, you might just spend enough to reach the 7.5 percent threshold required to deduct them as an itemized expense.

In addition to the usual costs like doctor visits, prescriptions and expenses you paid for in full because they were not covered by your policy, make sure you also count associated health-care expenses. They include some insurance premiums (payments made from already taxed income, as well as some of the cost of long-term care insurance), alcohol- or drug-abuse treatments, other medically-prescribed treatments (a weight loss program your doctor says you need to stave off a heart attack), and even miles driven to receive medial treatment.

3. Atypical charitable donations
In addition to giving money or household goods, some other contributions could help bulk up your itemized deductions. Did you give away a car last year? What about helped out at your local hospital? You can't count the value of your volunteer hours, but if you bought a uniform in connection with the service, that cost, along with the costs of keeping it clean, count. And those are just a few of the ways your can take tax advantage of uncommon, but deductible, donations.

4. Forgetting your reinvested dividends
This isn't strictly a tax deduction, but it can cost you when you compute any capital gains or losses. When you have your mutual fund earnings automatically reinvested, you pay taxes on those earnings in the tax year they are paid. That's part of the reason you, and the IRS, get those 1099s. This increases your tax basis, which you subtract from the sale profit to figure how much is taxable gain. So make sure you count those earnings.

5. Moving expenses
You can make tax use of more than just the cost of the van and the miles you drove to your new job-related home. Remember that goofy write-off for transporting Fido, too? It counts. In some cases, at least part of your storage costs might be deductible. And first-time employees, listen up! Although you couldn't write off the costs of searching for and landing that first job, if you have to move to work there, then your moving costs are deductible.

6. Job hunting
About that search for a new job. Make sure you total up everything, and I mean everything. That includes employment and outplacement agency fees, resume printing and mailing costs, and travel expenses as long as you hit the road primarily to look for a new job. You don't even have to go out of town to look. A job interview across town counts, so track the mileage. Just make sure that all the job search costs went toward getting hired to do the same line of work. Uncle Sam won't subsidize career changes.

7. Home office expenses
You decided instead to start your own company, but you didn't want to deal with claiming your home office. That's fine. The IRS appreciates honest taxpayers who don't try to write off a space that's not used exclusively for work. But even if you're working out of that spare bedroom or a corner of the den, the supplies you need to do your job from home are deductible. That includes not just the notepads and pens, but business cards, books to help you do your job and even the new laptop you bought so that you wouldn't have to fight with the hubby or kids over who gets to use the family PC.

8. Military reserve travel
Are you in the National Guard or a military reservist? Then you might be able to write off some of your travel in connection with your service. If travel more than 100 miles to a drill or reserve meeting and have to stay overnight, you can deduct the cost of lodging, the per-mile rate for driving there (plus tolls and parking), as well as half the cost of your meals. You don't even have to itemize to get this tax break. It's found in the adjustments section at the bottom of Form 1040.

9. Child care costs
Of course you counted the daycare and after-school expenses you paid so that Jimmy and Julie were taken care of while you were at work. But once school was out, if you sent the kiddos to a day camp during the summer, those costs count as allowable child care costs. So be sure to claim them when you figure you child and dependent care credit.

10. State income taxes
How can you overlook this, you ask. the amount is clearly stated right there on your W-2. But what about extra income taxes you paid to your state and local tax collectors last filing season? Remember how you came up a couple hundred dollars short? Be sure to add that payment to the amount withheld from your paycheck or that you paid in quarterly installments to your state tax office.

11. Jury pay
If your boss paid you while you sat through a week of boring testimony, lucky you! What if, however, you boss also required you to fork over the jury pay you got while empaneled? Then you can deduct that amount as an above-the-line deduction at the bottom of your Form 1040. The reason you don't want to overlook this break is because you should have reported the jury pay as income. But if you turned it over to your company, you get to zero it out with this tax deduction.

12. Retirement tax savings
2008 was a tough year for many folks, but you stuck with your savings plan and kept putting money in your 401(k). Yay you! Now be sure you get credit for it, literally. The Retirement Savers Credit affords moderate- and low-income taxpayers a way to get back part of their retirement plan contributions, be they via workplace plans or IRAs. This could be worth $1,000 in tax savings, so look for it on line 51 of your Form 1040 or line 32 if you file a 1040A.

13. Refinancing points
Were you lucky enough to get a home loan last year to help make your monthly payments more affordable? If your refi included points, then be sure to write them off. Just be sure you do so in the proper amount. Unlike when you buy your house and get to deduct all those loan points at once, with a refi you have to spread out the deduction over the life of the loan. So if you got a 30-year refi, you can deduct $33 a year for each $1,000 of points you paid. No, it's not a lot, but when it comes to reducing taxes every little bit helps!

Here's hoping that some of these tips will bring you tax-saving luck, this Friday the 13th and through the rest of the tax season!

Comments

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Bryan Williamz

wonderfull!! that are really great ideas. thanks for helping out. i suggest every one to read it

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