With the April 15 IRS tax deadline looming, its time to start thinking about deductions. Tax deductions are expenses you incur that lower your income in the eyes of the IRS. The lower your income, the less the government expects you to pay in taxes. Most of you know you can deduct mortgage and student loan interest, but there are a ton of other totally legit ways to lower your tax bill.
In “The Most-Overlooked Tax Deductions” Kiplinger lists 19 tax breaks you may have forgotten about or didn’t know existed in the first place, including state sales tax, moving expenses for your first job, refinancing points, charitable donations and more. In addition, property taxes, vehicle registration fees, the annual cost of your safe deposit box and child care are all tax deductible expenses. You can even deduct tax preparation fees. If you work from, you can deduct a percentage of you housing costs. For example, if your home is 2,000 square feet, and you use 200 sq.ft. for business purposes, you can deduct 10% as business operating expenses. For more deductions, check out this informative article from Helium, an awesome personal finance site.
A word of caution: be sensible when combing over your expenses while looking for deductions. You do not want to get on the wrong side of the IRS! Entrepreneur offers some expert advice on how to properly claim your deductions. Approach the whole enterprise with the right attitude–you just don’t want to pay more taxes than you owe, not put one over on the government!