5 Tax Deductions You’ve Never Thought About
Hybrid Cars:If you own a car that is run primarily on electric, it is well known that you can utilize a deduction known as the electric vehicle credit. Hybrid cars, which are becoming more and more popular in today’s society, do not qualify for the electric vehicle credit since they are not run primarily on electric motors. However, hybrid cars may qualify for the clean-fuel deduction. Generally, the clean-fuel deduction is limited to the cost of the electric components used in the vehicle. Also, to claim this deduction on your tax return, you must be the original owner of the vehicle and it must be used for your own business or personal use. The popular 2005 Ford Escape is certified to be eligible for the one-time clean-burning fuel deduction, which allows the purchaser to claim a deduction of $2,000.00 on their tax return. Taxpayers can claim a deduction for any vehicle that uses clean-burning fuel. However, in 2006, tax law will only allow up to $500 for the clean-burning fuel deduction.
IRA Contributions:Making regular contributions to an IRA not only lowers your income and creates a tax advantage in that respect, you may also qualify for an IRA contribution credit. To be eligible, your adjusted gross income must be $50,000 or less if you are married and filing a joint return, $37,500 or less if you are head of household, or $25,000 or less for any other filing status. Also, you must be 18 years old or older, cannot be claimed as a dependent of any other taxpayer and cannot be a full-time student. The credit varies from 10 to 15 percent of your contributions, anywhere up to $2,000.
Volunteer Work:Don’t overlook your generous year-round volunteer deeds at tax time. Did you take your local youth group to camp? Help transport a class to a field trip? Drive for Meals on Wheels for your local church? If so, make sure to keep track of your volunteer mileage. In participating in these volunteer activities, you can deduct 14 cents per mile as a charitable contribution on your tax return. Don’t forget to include these deductions in addition to other contributions you’ve made throughout the year, such as monetary contributions to a church, charity, etc. Tangible items donated to charities, such as clothing, supplies or equipment, are also tax deductible.
Medical Expenses:If you undergo a weight-loss program to control obesity, you can deduct the cost and expense of the program. The cost of any foods that are a substitute for the foods you normally eat are generally not deductible, however, you can deduct the cost of the foods if those foods help to treat or cure an illness, the foods do not satisfy your nutritional needs or if the need for those foods is verified by a physician or professional.
Employment Expenses: The United States government loves to encourage people to find and keep employment. As such, you may deduct the cost and expense of job application, such as resume production, paper, supplies, printing, resume mailing, the cost of contact calls to employers and even mileage expenses during travel for job interviews (provided that you were not reimbursed for these expenses). Once you are employed, you may deduct the cost of any work uniforms, work shoes and union dues, since such costs are considered business expenses on your part.
Make tax time a year-round concern, instead of a one-time worry. Most Americans only worry about tax issues during tax season, but proper planning throughout the year will result in a more efficient filing, a better knowledge of your available tax deductions and huge savings at tax time. Take note to watch out for and document all expenses that can be used as deductions and make plans for investments and donations with the ultimate goal of tax savings in mind. A keen eye for expenses and tax-saving maneuvers, along with valuable knowledge of hidden tax deduction opportunities can turn your tax experience into a positive one that puts more of your dollars back in your hands and out of Uncle Sam’s pockets.
