Who doesn’t want to lower their tax bill or increase their tax refund? There are opportunities for tax deductions that you have probably never heard about but can save you money. Here are some tax deductions that you should not overlook.
- Health Insurance Premiums: Although you can deduct medical expenses, the expenses have to exceed 10 percent of your adjusted gross income to be deducted. This does not apply to most people. However, if you are self-employed and responsible for your own health insurance coverage, you might be able to deduct 100 percent of your premium cost. This amount is not entered as an itemized deduction but the amount is taken off your adjusted gross income.
- Tax Deductions for Teachers: Let’s be honest, teachers should be given all the help they need. Teachers do not get enough money or credit for all that they do which is why this deduction is one of my faves. The IRS allows K-12 educators to deduct up to $250 for materials for their classroom. This amount is also taken from your income so you do not have to itemize to take advantage.
- Unusual Business Expenses: Yes, everyone knows you can deduct business expenses; however, there are many opportunities to deduct unusual expenses that you most likely would not think to deduct. For example, a bodybuilder can deduct the body oil he or she uses in competition. I can honestly say I would not have thought about that one on my own.
- Clarinet Lessons and Other Medical Necessities: Someone once deducted their child’s clarinet lessons, and it was perfectly legal because they were able to show a medical study which showed playing the clarinet could help correct an overbite. There are other situations where doctors have been able to prove that swimming pools, hot tubs, etc… are a medical necessity for therapy and were able to be written off as a tax deduction.
- Lifetime Learning Credit: This is a great opportunity to save some money on additional education. It can be used for any reason and virtually any school. It is calculated as 20% up to $10,000 of expenses. The income limit for the credit is $65,000 if single and $130,000 if married. This also includes continuing education classes. If you need to brush up on your computer skills or if you want to learn a different language, even through an online course, then use this credit on your taxes to save money.
There are some extremely unusual tax deductions out there including deductions for whaling captains, parents of kidnapped children and fishing-tackle-box manufacturers. Strange, right? However, everyone loves a tax deduction. Therefore, make sure you research and talk to your accountant about tax deductions that are right for you.