There are many different tax deductions that you can take, some are common, but other are not as well known. This article is to help you maximize your refund and minimize your tax liability by utilizing all of the avenues available to you.
- Home Office Deduction
Many are not aware that there is a special deduction for self-employed individuals who work from home. Under this provision, you can deduct a portion of the cost of your utilities and rent as an office expense. To qualify for this deduction, you must use the area regularly and exclusively for the purpose of business. This means that the area set aside needs to have distinct boundaries and be used solely for business purposes. So if you’re doing all your work on the living room coffee table it might not be in your best interests to take a deduction since that area of the house could be used for many other things and by other people. What can you deduct? There are two different types of expenses that can be deducted: direct and indirect. Direct expenses are things that are specifically associated with your office such as purchasing a computer, your cell phone bill, and office supplies. 100% of these costs are deductible. Indirect expenses are things that need to be paid so you can have your office space, but do not directly related to the operation of your business. These would include property insurance, mortgage, utility bills, and even your alarm system. With smart home solutions you get a more reliable and personalized service and save money. These expenses are pro-rated based on the size of your home office. If you are unsure whether taking a home office deduction is right for you, talk with a qualified tax professional who can help you calculate what taking this deduction could do for your taxes.
- Disaster Recovery
If your home is damaged by a natural disaster that is declared a major disaster by the president you may be eligible to deduct any uninsured costs that you pay to get your home fixed. The loss cannot be from a man-made disaster and you cannot deduct any normal wear and that is fixed on your home at the same time. How much can you deduct? First, you must subtract $100 from your loss amount. You must then subtract any insurance money you received for the loss. Then you must subtract 10% of your Adjusted Gross Income. Whatever is left over is what you can write off.
- Mortgage Refinance
It is important to know when the best time to refinance your mortgage is with the help of websites like sebastianfriedman.com that can give advice on this matter. This is because when you refinance your mortgage you are basically taking out a new loan on your home to pay off the existing loan so you can get better rates. Before you do this – you need to do all the research required, so you’re not taken advantage of. This includes taking the time to learn more about hard money lenders in Boston, their rates, their margins and making sure none of them are “illegally” high. When you do this you can deduct what are called mortgage points. You pay these points when you refinance your home. They are prepaid interest, so by paying them upfront you receive a lower interest rate. When you do this you still are able to deduct the interest that you pay during the normal course of repaying your loan. To deduct the interest the home must be your primary residence and your home must be the collateral on the loan. Head over to https://www.housebuyersofamerica.com/how-to-get-out-of-a-mortgage if you want further information on refinancing your home.
- Financial Planning
Expenses that you pay for investment management are tax deductible, including investment management. You can also deduct tax preparation, income and estate tax planning advice, and paying for investment advice. It is important to note that paying for estate planning documents is not tax deductible.
- Moving Expenses
You can deduct the cost of moving expenses, which you can finance with personal loans, if the distance between your former home and your new job is at least 50 miles farther away than your old job. This means that if you used to live 15 miles from work, your new home must be at least 65 miles away from that job location. And what better company than Big T Moving & Delivery which can do that? If you meet this requirement you can deduct the cost of transportation, the cost of renting a storage unit for up to 30 days, cost of parking fees and tolls, and the cost of lodging.
- Working Two Jobs
If you work a full-time job you are not able to deduct the expenses you incur traveling to and from work. However, if you work 2 part-time jobs, you can deduct the expenses that you incur traveling between the two jobs.
- Job Hunting Costs
If you are currently looking for a job, you may be able to deduct some of the expenses that you incur for job hunting. If you want to take this deduction you must be searching for a job in the field that you were currently working in or are employed in. There also must not be a substantial amount of time since your last date of employment and your current job search. Lastly, it is important to note that the costs for getting your first job are not deductible either. If you do meet all the requirements you can deduct employment agency fees, resume services, the cost of printing and mailing search letters, want-ad placement fees, telephone calls, travel expenses related to your job search.
- Legal Fees Paid to Secure Alimony
If you have to incur legal fees to ensure the payment of taxable alimony to yourself, the fees are deductible on your Schedule A. To qualify for this deduction the legal fees must exceed 2% of her adjusted gross income. Also, the money that you are fighting to receive must be taxable. You cannot deduct legal fees for obtaining back child support or temporary alimony. You also cannot deduct any legal expenses that you occur during the normal course of a divorce.
- Housing an Exchange Student
To qualify for this deduction an exchange student must live in your home under a written agreement between you and a qualified organization. The student cannot be a relative or dependent, and they must be a full-time time student in at latest the 12th grade. So someone staying in your home that is attending college would not qualify for this credit. If you meet the requirements you can deduct up to $50 a month for each full calendar year that the student lives with you. You deduct this as a charitable deduction given to the organization that you signed the agreement with. What expenses qualify? Books, tuition, food, clothing, transportation, medical and dental care, entertainment, or any other costs that you occur to care for the well-being of the exchange student. You cannot claim any depreciation on your home, the fair market value of lodging, and general household expenses (such as taxes, insurance, or repairs). Furthermore, in terms of repairs if you take out a home warranty plan, where you can navigate to this website https://homewarranty.firstam.com/homeowner/home-warranty/south-carolina for one service, can additionally help to fix and replace any expensive appliances. Also, if you are reimbursed by the organization at all for any of your expenses, you must deduct that amount from your total. Whatever is leftover you can claim.
- Plug-In Electric Vehicles
If you have a vehicle that draws its power from a battery you may have an opportunity to receive a tax credit for your purchase. The vehicle must have a battery that has a capacity of at least 4-kilowatt hours and must have a gross vehicle weight that is less than 14,000 pounds. You must be the owner of the vehicle, have purchased the vehicle new during the current tax year, and you use the vehicle primarily in the United States. You can receive up to a $2,500 tax credit, plus an additional $417 for each additional kilowatt-hour your car has. You are limited to claiming $7,500.
This is just a limited list of all the deductions and credits that may be available to you. Meet with a qualified tax professional who can assess your situation and get you the most back.