The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline. Tax information below will change next year for your 2018 under the new tax law effective on your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
Tax season is almost over, and you might be wondering if there’s anything you’re forgetting. Though TurboTax has you covered and asks you simple questions to determine your tax deductions and credits, it’s good to know some common ones so you’re prepared! So here are five tax deductions for you to take advantage of!
Contribute to a Traditional IRA
You have until tax day to open and make a contribution towards a Traditional IRA. A contribution to a Traditional IRA is one of the few things you can still do to lower your taxes after the year has ended and still make an impact on your taxes you are filing now, so take advantage of it if you haven’t yet done so. When you make the contribution, make sure to indicate that it is for last year or your broker will default to applying it towards this year. You can contribute up to $5,500 ($6,500 if 50 and over). If you are self-employed you can contribute up to 25% of your net earnings from self-employment or $54,000 for 2017 ($55,000 for 2018)
Don’t Forget Those Miscellaneous Expenses!
There are a series of expenses that, on their own, don’t often amount to much. However, if you combine them all and they exceed 2% of your adjusted gross income (AGI), you may be able to deduct them as miscellaneous itemized deductions. Some of the expenses that fall into this miscellaneous expense category are: unreimbursed employee expenses, job search expenses and tax software expenses. You especially don’t want to forget these tax deductions since they are being eliminated beginning in tax year 2018 (the taxes you file in 2019) under the new tax reform law.
Uninsured Casualty, Disaster, and Theft Losses
If you suffered any casualty loss as a result of an unusual event like a flood, fire, or some other unforeseen event, you may be able to deduct the loss. If you suffered a theft of property from your home, you could deduct the fair market value of the items stolen. Keep in mind: when making the claim, you have to deduct any insurance payments you received associated with the loss. You also need to exclude any amount you received as reimbursement from your insurance company when you claim your deductions. If you suffered a loss you don’t want to miss this tax benefit since under the new tax reform law you will only be able to claim a casualty loss if your casualty was declared a federal disaster beginning with tax year 2018 (the taxes you file in 2019). If you were a victim of the recent hurricanes or California Wildfires there are also special casualty loss rules that were voted into law for 2017.
Make Any Bad Investments?
If you have capital losses, where you sold an investment at less than the purchase price, you can deduct up to $3,000 of that loss and have it offset your ordinary income. To do this, you have to realize the loss by selling the investment. After you realize the loss, you need to offset it with any previously realized capital gains. If you still have losses, you can deduct them. If you have greater than $3,000 in losses, you claim the $3,000 and carry forward the rest for use next year.
Charitable Giving Can Give Back
We all know contributions to charitable organizations are tax deductible and our donation of time is not tax deductible, but did you know that if you drove your car for charity you can deduct 14 cents per mile driven? Anything you may have purchased out of your pocket for a charitable organization also may be tax deductible. If the organization was having an event and you purchased balloons for them, remember the receipts because you may be able to deduct that purchase as a charitable contribution. If your contributions exceed $250, get the organization to give you a written document acknowledging your contributions.
No fooling, these tax deductions can really boost your tax refund, so don’t forget to claim them if you can!
Don’t worry about knowing tax rules and forms. TurboTax will ask you simple questions and give you the tax deductions and credits you deserve based on your answers. Have a tax question? You can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered from the comfort of your couch. A TurboTax Live CPA or Enrolled Agent can also review, sign, and file your tax return.