Often-Overlooked Tax Breaks

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Often-Overlooked Tax Breaks
Boyle Henderson

Non-cash Charitable Gifts: You can’t deduct the value of your time spent volunteering, but if you buy supplies for a group, the cost of that material is deductible.  Similarly, if you wear a uniform in doing your good deeds, for example as hospital volunteer, the costs of that apparel and cleaning bills also can be counted as charitable donations. If you use your vehicle for charitable purposes, such as delivering meals to the homebound in your community or taking the Scout troop on an outing,  the IRS will let you deduct that travel at 14 cents per mile.

 

Moving Expenses: Most taxpayers know they can write off many moving expenses when they relocate to take another job.  But what about your first job?  Yes, the IRS allows this write-off also.

 

Job Hunting Costs: Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies, are deductible as long as you itemize.  The one downside here is that these costs, along with other miscellaneous itemized expenses, must exceed 2 percent of your adjusted gross income before they produce any tax savings.  But the phone calls, employment agency fees and resume printing costs might be enough to get you over that income threshold.

 

Mortgage Refinance Points: When you buy a house, you get to deduct the points paid on the loan on your tax return for that year of purchase.  If you refinance your home loan, you might be able to deduct those points too, as long as you use refinanced mortgage proceeds to improve your principal residence.

 

Retirement Tax Savings: When you contribute to a retirement account, either an IRA (traditional or Roth) or a workplace plan, you can get a tax savings for up to 50 percent of the first $2,000 you put into such accounts.  This means you get a $1,000 tax credit, which is a tax break that directly reduces dollar for dollar any tax you owe.  This credit phases out as your income goes up.

 

Educational Expenses: The Internal Revenue Code offers many tax-saving options for individuals who want to further their education.  The tuition and fees deduction can help you take up to $4,000 off your taxable income. The Lifetime Learning Credit could provide some students (or their parents) up to a $2,000 credit. Don’t forget the American Opportunity tax credit, which offers a dollar-for-dollar tax break of up to $2,500.  This education tax break was created as part of the 2009 stimulus package as a short-term replacement for the Hope tax credit and subsequently was extended through tax year 2012.

 

Call Daenen Henderson and Company at (318) 445-4585 to help you with tax planning, retirement planning and education planning for your children and grandchildren.