We are deep in the throws of tax season, and although many of you have already filed, it certainly never hurts to become more aware of possible deductions. And it goes without saying that we all love saving money or getting a larger return. Below are some unusual deductions that taxpayers often don’t consider or simply don’t even know exist.
- Letting a friend crash on your couch – Did you know that you could have been claiming your college buddy who’s been sleeping on your couch for the last 5 months as a dependent? That is if said friend is earning less than $4,050 and you have been providing significant financial support. Similarly, children supporting their retired, elderly parents may claim them as dependents, even if they don’t live in the same home.
- Putting in a pool – Unfortunately, you cannot deduct this item simply because you like to cool off in the summertime and it cost you a lot of cash. However, if you have significant health issues, such as obesity or heart disease, and your doctor has recommended swimming as a beneficial form of regular exercise, putting a pool in your backyard may qualify as a deductible medical expense.
- Sending your kids to camp – This credit is only available to working parents. If both spouses work, and you send your child or children to either a summer day camp, a mini winter camp or even a daycare program over winter break, you may be able to receive a credit between $1000-$2000, depending on the number of children. Unfortunately though, overnight camps do not qualify under this credit.
- Losing money in Vegas – For those who gamble with some regularity, you know you must report your winnings and pay the subsequent taxes. However, reporting your losses as well can offset the amount of taxes charged on your winnings. One thing to keep in mind though is that you can only claim in losses the amount you made in winnings, no more.
- Taking a course – Did you take a design or business course in the last year to expand your knowledge or further develop yourself in your career? Anyone who took a course that enhanced their knowledge to boost job prospects and paid tuition or enrollment fees, or purchased books or supplies, can claim the Lifetime Learning Credit. The max amount one can receive is $2000, and the credit phases out altogether once your income reaches a certain level.
- Searching for a job – Paying fees to a job agency, hiring a career coach, or traveling to long-distance interviews can all be deducted if they amount to less than 2 percent of your adjusted gross income. However, buying a new suit or a nice pair of shoes for an interview do not qualify as deductible expenses.
- Driving for work – While your commute to work does not count as a deduction, most of the driving done during your work day, such as driving to a meeting or even to Office Max, can be deducted as work-related up to 54 cents per mile. Miles must be tracked exactly and documented properly to receive any deduction though.
If you have any questions about these potential income tax deductions, please contact me at pmcallister@MKRcpas.com.
