The most popular New Year’s Resolution is losing weight, eating healthier and hitting the gym. Many of us make this resolution year after year (excuse me while my fingers leave the keyboard so I can raise my hand). Getting healthier is important, for sure, but is it tax deductible? What about your other New Year’s Resolutions? Here’s the skinny on the deductibility of your New Year promises.
Lose weight. You may be able to take a medical expense deduction for weight loss programs for treatment of specific diseases, including obesity. But if you are losing weight just to improve your appearance and overall health, you won’t be able to deduct the costs of your weight loss program.
Get in shape. Similar to weight loss programs, health club dues prescribed for a medical condition are tax deductible as medical expenses, but the dues you pay to improve your overall fitness aren’t deductible.
Quit smoking. If you get acupuncture treatments or inpatient treatment at an alcohol or drug addiction center, you may receive a medical tax deduction. The same is true if you enroll in an approved stop-smoking program. And you may also get a tax deduction for prescription drugs to alleviate nicotine withdrawal.
Clear out clutter. Clean out your closets and the garage, donate your unwanted items to charity, and you may be able to get a tax deduction. To take a deduction for property donated, it must be in usable condition, and you must establish its fair value. For most clothing and household goods, that’s the thrift shop value. You can use the TurboTax ItsDeductible to track and determine the value for most household items. You’ll also need a signed receipt that proves you made the donation.
Save more. The money you put into your 401(k) or traditional IRA is subtracted from your income currently. You’ll pay tax on the funds once you retire and begin taking withdrawals. The sooner you begin investing in these programs, the better. Small contributions growing from an early age are more valuable than large contributions made years later.
Invest wisely. The cost of financial publications and financial advice are tax deductible as miscellaneous deductions on your tax return, to the extent that your miscellaneous deductions exceed 2% of your income.
Get smart. If your resolution includes taking courses to learn a new skill or language, you may be able to qualify for the Lifetime Learning credit. If so, you’ll get a tax credit of 20% of the cost of tuition and books and equipment you are required to buy from the school. That’s a credit against your taxes which can be claimed by anyone who takes a course at a higher education institution (including vocational schools and other post-secondary institutions) You may be able to claim a tax credit of up to $2,000 a year.
When you prepare your taxes using TurboTax you won’t be required to know what you can deduct. TurboTax will ask simple questions about you and give you the tax deductions and credits you’re eligible for.