By now you’ve probably either made an appointment to complete your income tax return, or you have filed for an extension beyond the April 15 deadline. Either way, if you itemize on your tax return, be sure that you’re taking every deduction allowable by law to minimize your tax liability and keep the money that is rightly yours.
For starters if you’re a parent, take advantage of all the tax benefits that come from having children — from itemizing adoption expenses to deducting college costs, if eligible.
Do you work? If so, you want to make sure that you’re not leaving any work-related tax deductions on the table. This is relevant whether you work for someone else or you work for yourself, as I do. I’m considered a self-employed sole proprietor.
The IRS tip sheet on the home office deduction says that if you use part of your home for your business, you may qualify to deduct expenses for the business use of your home. The IRS has a publication for determining whether your home office deduction is legit, such as whether it is used exclusively and regularly for business purposes. In addition, your home office is the primary place where you do business, is where you meet with clients or customers and you do not have an office anywhere else.
Once you qualify as having a home office, you can write off certain expenses related to that home office, including a portion of your rent, real-estate taxes and utility costs. Of course, you should work with a tax professional to ensure you are taking the deductions that the IRS allows and not just making things up as you go along.
Now let’s say that you work for someone else — i.e., you are an employee of a company. You can claim some work-related expenses on your taxes as well.
For instance, if you incur travel-related expenses — and your employer does not reimburse you for those expenses — you may be able to include them on your income tax return. The same goes for car expenses when you use your vehicle for business purposes, meals when you’re away on business (you may only be able to write off 50 percent of your actual meal costs) and other job-related expenses. According to the IRS, “if you are an employee, you generally must complete Form 2106 to deduct your travel, transportation and entertainment expenses.”
Some employers reimburse their employees for these expenses — and then include that reimbursement on year-end W2 tax forms. Doing so can affect your ability to include these expenses as write-offs on your taxes. Again, make sure you speak with your tax professional before assuming that you can claim any expense as a legitimate tax deduction.
According to Turbo Tax, the following work-related expenses may also be included on your income-tax return:
- Fees and dues for any professional associations related to your line of work
- Money spent looking for a job
- Union dues if being in a union is a job requirement
- Any fees you incur with a work-required uniform or clothes
- Legal fees related to your job
If you spent money on something work-related and think it can be included on your tax return, then by all means, find out. There is no reason for you to leave any work-related expenses on the table when you could be using them to lower your tax bill or, even better, increasing your chances of getting a refund.
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