Tax season is upon all of us once again and year after year millions of Americans fail to receive the tax refund they could have received if they had been more vigilant in applying deductions. So before filing for your tax return this year, consider a few of the tax deductions that others are missing.
- Charitable donations. While this tax deduction is fairly well-known, its complete use is really achieved by most Americans. One of the best examples of this deduction being underutilized by the standard citizen is when people fail to account for the value of clothing they have donated throughout the previous year. Clothing donations to secondhand stores and other institutions qualifies as a charitable donation, yet people rarely if ever keep receipts and claim those deductions on their 1040s. If it is too late to prove your charitable donations (aka, you never bothered to get a receipt) then remember this deduction for next year as it is one that almost everyone neglects.
- State sales tax. The IRS allows for citizens to choose to deduct either their local state’s income tax or sales tax, so for those who live in states with income tax this one may not be applicable as deducting the income tax is usually the better deal. However, for those who live in states without income tax, do not forget this beauty of a tax deduction and calculate the sales tax expenditures for the last year. Big ticket purchases, such as a new car or boat, are especially easy to overlook but can give back large returns.
- Jury pay given to an employer. There are some employers who will offer to continue paying an employee their regular salary while the employee is called in for jury duty if the employee gives to the company the money they receive as jury pay. This seems like a good deal for most as jury pay often is far less than the person’s salary except when they consider taxes. You see, the IRS requires that jury pay be reported as taxable income, but if you have given over that pay to your employer in exchange for your regular salary than you are being taxed for money that simply changed hands. Luckily, if this is the case, you are able to deduct that amount while filing your taxes which can even things out in the end (but only for those who don’t miss this commonly forgot deduction).
- Moving expenses for your first job. Many young people miss this available tax deduction simply because they do not know it exists. Because other expenses incurred while looking for a job are not tax deductible, many forget that they can deduct the costs for moving to get to the job. Moving to a new area to start your first job is an expense, so do not forget to claim it as a deduction.
While these are only four commonly missed deductions, the truth is that millions of dollars in available refunds are left in the IRS coffers year after year simply because of unexploited deductions.