It’s the new year, and many of us are looking forward to accomplishing something new in 2017. Some of the most common resolutions include:
- Lose Weight
- Get Out Off Debt
- Learn Something New
- Travel More
All of these goals have something in common, too: they may have the added bonus of a tax deduction! While I’m sure you’re excited to make these changes for a sense of personal accomplishment, it would certainly be icing on the cake if you can get some financial benefits as well. Read on to learn more:
- Lose Weight: If you’re working to drop excess pounds this year, you can take satisfaction in knowing you’re taking big steps to reducing health care expenses in the future. However, you may be able to deduct certain weight loss medical expenses, like gastric bypass or visits with the nutritionist, if prescribed by a doctor to mitigate or prevent disease. Even the cost for commercial programs like Weight Watchers can be deducted, providing your doctor has confirmed that your current weight is a threat to your health. You must have this in writing.
- Get Out of Debt: While there’s no tax deduction for consumer debt (i.e. credit cards), if you have a student loan or mortgage, you’ll want to look into deducting your interest payments. You can deduct interest paid not only on your home’s mortgage, but also on a second mortgage, a line of credit or a home equity loan.
- Learn Something New: If you attend a qualifying trade school or college, you may be able to claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You cannot claim the American Opportunity credit in the same year you claim the Lifetime Learning credit because the IRS only allows one tax reduction per student, per year. For most students who are in one of their first four years of post-secondary education, the American Opportunity credit can provide greater tax savings since the maximum credit is $2,500 vs. $2,000 for the Lifetime Learning Credit. Luckily, TurboTax will help determine what you are eligible for!
- Travel: Wouldn’t it be great to get tax deductions for your vacations? Unfortunately, not all travel is created equal in the eyes of the tax code. The good news is you may be able to deduct qualifying non-reimbursed expenses for business trips. To determine whether you can deduct an expense on your tax return, you must meet two requirements: your duties require you to be away from your regular place of business substantially longer than an ordinary day’s work and you need sleep or rest to meet the demands of your work while you’re away. Common expenses include transportation costs, tolls and lodging.
- Volunteer: If you want to do more in support of your favorite charity, volunteering can be rewarding in more ways than one. You may be able to get a tax deduction, not for your time spent, but for supplies you purchased for the charitable organization, miles driven to get to the charitable organization or money donated during the year.
Make sure you keep good records and your receipts to make things easier come tax time. TurboTax will also make claiming these tax deductions easy by asking you simple questions related to you so you don’t need to know anything about these tax laws.
Achieving Your New Year’s Goals
So let’s get to the harder part: achieving your goals! The secret is break your goal or goals in pieces and work on them one at a time. You can’t change your life until you change your habits. If you want to save $2,000 by the end of the year as part of your emergency fund, you can break it down and see that you just have to save about $167/month.
Change doesn’t have to be big, but it has to be consistent. Celebrate each step you break through. I’d love to hear from you. What are your goals for this year? What ideas do you have to reach them?