12 Surprising Tax Deductions You Didn’t Realize Existed
The taxman cometh, whether you want him to or not. But savvy taxpayers can reduce their tax bill (or get a bigger refund) by taking all of their available tax deductions.
Chances are, you already know about the big-ticket ways to cut your taxes, such as taking the mortgage interest deduction and making contributions to certain retirement accounts. Those well-known income adjustments are just the tip of the tax deduction iceberg, though. There are plenty of other ways to slash your tax bill, depending on your situation. If you moved in the past year, for example, the cost of your rental truck could be deductible. So is the portion of your student loan payments that went to interest.
And then there are the even quirkier deductions. You might know you can deduct medical expenses, but did you realize that includes items, such as prescription glasses and contact lenses? You’re probably planning to deduct the cost of business trip your employer didn’t reimburse, but you might have forgotten you also can deduct the money you pay for a subscription to a trade journal.
In most cases, you’ll need to itemize to get these write-offs. And because many fall into the “miscellaneous deductions” category, the total amount you’re claiming must exceed 2% of your income before you can write off the expense. In all cases, it’s important to keep good records and to talk to an accountant or another tax expert before you claim something on your taxes. She’ll be able to review your situation and tell you whether your deduction is legitimate.
Check out these 12 deductions that might be able to save you some money on your taxes. The last deduction on the list is a nice break if you pay someone else to do your taxes.
1. Your LinkedIn premium account
You might be able to deduct the $30 a month you’re spending on a LinkedIn premium account. The IRS allows you to deduct job search expenses, provided you’re looking for work in the same field as your current one, aren’t a first-time job seeker, and haven’t taken a long break from the workforce.
Job search sites that charge a fee, such as LinkedIn, are deductible, according to Investopedia, as are fees you pay to an employment agency that helps you find work. The cost of printing your resume and self-financed trips you take to interview for a new job also are deductible.
2. Membership dues to a professional organization
A widget-maker who spends $100 every year to join the National Society of Widget-Makers can deduct those dues from his taxes, the IRS says. But membership fees you pay to a social organization aren’t deductible, even if your primary purpose for joining the country club is networking or if you only use your airline club membership when you travel for business.
3. School supplies — if you’re a teacher
Sorry, mom and dad. You can’t deduct the cost of buying pencils and protractors for your kids. But if you’re a teacher, you can subtract the cost of supplies you buy for your classroom. You don’t even need to itemize to get this tax break, though your deduction is capped at $250 unless you file Schedule A. Itemizers can deduct expenses that exceed 2% of their adjusted gross income, according to TurboTax.
4. A pregnancy test
Drugstore pregnancy tests can cost $10 or more each, and the total cost of all those sticks adds up fast if you’re trying to conceive. Be sure to keep your receipts because pregnancy tests are one of the many deductible medical expenses allowed by the IRS.
The catch is your total medical expenses must exceed 10% of your adjusted gross income to get the deduction. To get to that 10% threshold, don’t forget to deduct other childbirth- and pregnancy-related expenses (including the cost of in vitro fertilization and breast pumps) as well as other out-of-pocket medical costs, such as hospital fees and medications. You can even deduct the cost of getting to all those doctor’s appointments.
5. Your stolen jewelry
Getting robbed is bad enough, but it’s a double whammy when your insurance won’t cover the total cost of your loss. You can deduct the fair market value of items lost to theft and disaster, though you must subtract whatever you were reimbursed by your insurance. You also won’t be able to deduct the losses if they don’t exceed 10% of your AGI.
6. Gambling losses
An unlucky streak at the blackjack table could have a hidden benefit at tax time. The IRS allows you to deduct gambling losses from your taxes, but you need to be careful how you do it. For one, gambling losses are only deductible up to the amount of your gambling winnings. So, if you lost $1,000 playing cards in Vegas and won $0, you can’t deduct anything. But, if you lost $1,000 and later won $1,500 at the racetrack, you can reduce your gambling winnings by $1,000.
If you do plan to deduct your gambling losses, make sure you keep records. The IRS is not going to take your word for it when you say your losses just happen to be the same amount as what you won.
7. The brownies you made for the bake sale
You probably know you can deduct your charitable contributions from your taxes if you itemize, but you might not realize that in-kind contributions are deductible. So if you spent $50 on ingredients for brownies for a bake sale at your child’s school, you might be able to subtract that from your taxes.
The cost of butter and eggs aren’t the only charitable deduction you might be overlooking. The value of items you donate to a food bank or Goodwill also are deductible. You also can subtract the cost of driving you do as part of your volunteer work, such as delivering meals to seniors. But one thing you can’t deduct is the value of the time you spend volunteering.
8. The cost of your work uniform
Your boss might require your to wear a suit and tie to work, but you’re still not allowed to deduct your bills from Brooks Brothers on your taxes. But there’s one big exception to this rule. If you’re required to wear a uniform that’s “not suitable for everyday use” you can deduct the cost of buying and maintaining it.
Delivery people, firefighters, health care workers, police officers, mail carriers, transportation workers (such as bus drivers or flight attendants), and professional athletes can usually deduct their clothing expenses, according to the IRS. Protective clothing, such as goggles or work gloves, also might be deductible.
Costumes you wear for a performance are deductible but only if they “aren’t suitable for everyday wear.” So, if you’re a professional musician and your on-stage look is more Lady Gaga than Bruce Springsteen, you might be eligible for a write-off.
9. The cost of commuting between 2 workplaces
There’s not a lot of tax relief for frustrated commuters, who aren’t allowed to deduct the cost of driving to and from work from their 1040. But if you sometimes have to drive from your company’s main office to work at another location, you might be able to deduct those miles.
The same goes if you work two jobs, and you sometimes commute between them. For example, you leave your office at 5 p.m. and then drive straight to your second job as a bartender. The cost of driving to a temporary work location, such as a conference in a neighboring city, also might be deductible.
10. Passport fees for a business trip
The good news: Your boss is sending you to Paris for a conference. The bad news: You don’t have a passport, or your old one needs to be renewed. Because you’re required to get the passport for work, the IRS allows you to deduct the fees you pay, assuming your company doesn’t reimburse the expense. This rule could let you deduct as much as $135 (the cost of a new passport) from your taxes.
11. Your safe deposit box rental fee
The rent you pay for your safe deposit box is deductible “if you use the box to store taxable income-producing stocks, bonds, or investment-related papers and documents,” according to the IRS. But if you’re just using your box to store grandma’s wedding band or your baseball card collection, you’re out of luck. “You can’t deduct the rent if you use the box only for jewelry, other personal items, or tax-exempt securities,” the IRS says.
12. The cost of filing your taxes
Filing your taxes is a pain in the you-know-what, but the IRS does give you a small break. The money you spend to prepare your taxes is deductible. That includes the fee you pay to your CPA, the cost of filing online using a service, such as H&R Block or TurboTax, or the money you spent on books explaining how to file your taxes. You can even deduct the money you spent on stamps to mail your return, H&R Block says.