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Don’t Overlook Tax Deductions!
February 2, 2017
Here are 5 Deductions Taxpayers Often Overlook!
Technically, reinvesting dividends is not a tax deduction, but it is an important subtraction that can cost millions in overpaid taxes. Most investors have mutual fund dividends that automatically reinvest to buy extra shares. Many investors forget that each new purchase increases your tax base is in the fund, which reduces the taxable capital, gain when you redeem shares. If you forget to include reinvested dividends, your basis results in double taxation of dividends. If you are unsure of your basis, ask the fund for help. Funds often report to investors the tax basis of shares redeemed during the year.
Student Loan Interest Paid by Mom & Dad
Be aware that you can only deduct interest if you are legally required to repay the debt. Therefore, mom and dad can’t claim the interest if they make payments because they are not legally responsible for the bill. However, if parents repay a child’s student loan, the IRS treats the payment as if the money was given to the child, who then repaid the debt. As long as the child is not claimed as a dependant, he or she can deduct up to $2,500 of student loan interest paid by his or her parents.
Job Hunting Deductions
Many Americans do not realize they can deduct job-hunting costs. If you keep track of your job-hunting costs, you can write off qualifying expenses even if you don’t land a new job! Your job-search deductions may not exceed 2% of your gross income and you may not deduct expenses while looking for your first job.
Job-Hunting Deduction can include, but are not limited to:
Transportation expenses that were incurred as part of the job search (You can deduct 54 cents a mile for driving your car plus parking and tolls.)
Food and lodging if the search requires an overnight trip.
Taxi or Uber fares.
Employment agency fees.
Cost of printing resumes, business cards, postage or advertising.
Airline Baggage Fees
Did you know that if you are self-employed and traveling on business, you can deduct the added cost of baggage fees to your deductible traveling expenses.