Make the most of these overlooked deductions
Yesterday’s post discussed five of the most easily missed tax deductions. Now is a great time to review your receipts and records to see if you qualify for any of these tax deductions.
Hang on to those receipts, however. You’ll need them on tax filing day, and as proof of eligibility for a given deduction should you ever be audited.
As with any deduction, be sure to check with a licensed tax preparer regarding your eligibility for any itemized deduction, especially if this will be your first year claiming that deduction.
IRS tax code is complicated, and a qualified tax pro will be able to assess your unique tax scenario and also determine whether or not you are eligible for these deductions.
1. Education expenses:
Education doesn’t come to an end when you receive your diploma or degree. Enrolling in college courses that are specific to your skill set or to train for a new career is a good strategy in today’s economy.
Eligible expenses include books, tuition, fees and supplies not covered by financial aid, scholarships or tuition reimbursement through your employer.
2. Safe deposit box fees:
Be sure to keep track of monthly or quarterly safe deposit box fees; you can deduct them at the end of the year.
3. Foster care expenses:
The IRS defines a foster child as a child who is placed with you through a court order, judgement, or by a licensed private or government foster care agency. Unreimbursed foster care expenses are also tax deductible.
4. Lead paint removal:
If you’re planning on getting rid of the lead paint on that old house you just bought, good news: lead pain removal expenses are tax-deductible.
There is a catch, however. In order for it to be a qualified expense, the lead paint removal must be for the purposes of preventing a child from eating or otherwise consuming the lead-based paint.
The surfaces must also be in bad shape, and be within easy reach of a child who already suffers from lead exposure. In other words, if your child tested positive for lead exposure due to lead-based paint in your home environment, you do have a shot at deducting the paint removal costs.
IRS code relating to this deduction is complicated, so if you will be removing lead-based paint from your current home or a home you just bought, be sure to check with your tax advisor regarding this deduction.
5. Medical travel expenses:
If you or a loved one are ill and need to travel out of town for medically necessary treatment, hold onto to all of your travel and lodging receipts.
Types of Deductions
A standard deduction is a portion of your income that is not subject to tax that can be used to reduce
your tax liability.
The standard deduction amounts for the 2021 tax year are:
- $12,550 for married taxpayers filing separately and for taxpayers who file as single.
- $18,800 for the head household taxpayers.
- $25,100 for married taxpayers filing jointly or qualifying widow(er).
An itemized deduction is an expense that can be subtracted from adjusted gross income (AGI) to reduce your tax bill. Examples include