Want to save money on your taxes? If you could save even 5 percent, that would be worth the time to learn some tricks of the trade, right?
What many people don’t realize is that there are hidden tax deductions out there that can save you a good chunk of money. Maybe not a ton by themselves, but when added up it can make a hefty sum of money staying on your wallet.
Here are just a few.
Job Hunting Costs
When you’re looking for a job, you may end up spending money that you wouldn’t have otherwise. Driving to interviews, staying overnight in another town, using taxis or even just printing your resumes add up.
The good news is that you can deduct these costs from your bill from Uncle Sam. So while you’re driving from interview to interview, be thankful that you’re actually killing two birds with one stone!
Are you an investor? If so, and you reinvest the majority of your dividends- you’re in luck. Every time you reinvest dividends, you increase your tax basis in the fund. What that means is that your capital gains tax will go down when you do finally sell.
So even though this isn’t exactly a deduction, it is a way to help you save on your tax bill.
If you own a small company and you’re traveling on business, you can deduct baggage fees from your federal bill. This is definitely a lesser-known deduction, but is useful if you’re constantly on the road and paying those fees just so you can take your clothes with you.
Out of Pocket Charitable Donations
You probably already deduct every dollar you give to charities and non-profits like churches, right? And that’s great.
But you can actually save on your tax bill by deductions things you buy for the charity. For example, if you buy uniforms, office supplies or the gas for a charity’s vehicle, you may be able to deduct these from your tax bill.
Just keep in mind that if the amount is over $250, you’ll need something from the charity verifying that what you purchased fits the bill.
Last Year’s State Tax Bill
Did you have to pay your state some more money in taxes last spring? If so, you MUST deduct that amount from this year’s federal bill! After all, depending on how much you made that is likely at least a few hundred dollars, if not a few thousand. That can save you a big chunk of money this year.
State Sales Taxes
Probably the biggest secret tax deduction is your state sales tax! Even though this deduction expires often, it actually tends to come back more often than you might think.
The way it works is that you can deduct either the state sales tax or state income tax- whichever is higher. But if you live in a state that doesn’t even have an income tax, you make out like a bandit. You essentially get to deduct sales tax and you didn’t get taxed on your income. That’s a win-win.