7 Tax Breaks You Might Be Missing
Keep more of your earnings in your pocket with these sneaky (but totally legit) tax write-offs. Start saving your receipts now so that you don't have to scramble come April.
1. INVESTMENT MANAGEMENT FEES
Many people don’t know that they’re even paying fees because they are automatically deducted from their accounts, and the fee disclosure is rarely obvious to them or to their accountants, says Holly Thomas, a certified financial planner and founder of Tampa-based Holly Thomas LLC. Thomas had a client with a brokerage wrap account who wasn't aware it had a fee attached to it. When they went back over 10 years of statements, the client realized they had paid more than $20,000 in unnecessary taxes. To find out how much you're paying in fees, look on the last page of the year-end statement you receive from your brokerage company.
2. GYM MEMBERSHIP
If a doctor diagnoses you with a specific medical condition, such as obesity, and you’re using a gym membership to treat that illness as recommended by the doctor, then you might qualify for a deduction, says Jonathan Horn, a certified public accountant and senior manager with the American Institute of Certified Public Accountants Tax Policy & Advocacy Team. The catch: You can't have gone to this gym prior to your diagnosis.
3. MOVING EXPENSES
Moving expenses that aren’t reimbursed by your employer can be deducted by taxpayers if the relocation was the result of a job change. Eligible expenses include moving your items plus travel costs during the actual move, says Eileen Sherr, a certified public accountant and senior manager with AICPA Tax Policy & Advocacy Team.
4. PRE-TAX DAYCARE AND PARKING AT WORK
Transportation benefits such as parking or train tickets can be written off, says April Walker, lead technical manager with the AICPA Tax Practice & Ethics Team. “Also, employer-provided childcare benefits and benefits for educational assistance programs can result in significant savings to employees,” she says.
5. DONATED STOCKS
If you made a pledge to a charitable organization that you need to fulfill by the end of the year, consider whether you’re holding any appreciated securities that you could transfer to the organization, says Henry Grzes, a certified public accountant and lead technical manager with the AICPA Tax Practice & Ethics Team. “As long as you have held the security longer than one year, you are able to deduct the fair market value of the security at the time of transfer without having to come up with the cash to fulfill the pledge,” Grzes says. “And you will not have to pay the capital gains on your individual income tax return.”
6. STUDENT LOANS
You can deduct your student loan interest, says Lawrence Carlton, certified public accountant and tax director with Carlton & Duran in Massachusetts. “Although many folks don’t have the level of deductions necessary to itemize on their tax return, you can still deduct up to $2500 per year of interest expenses on student loans without itemizing,” Carlton says. Even if someone else is making the payments, you can still take the deduction as long as you’re the one who is ultimately liable for paying the loan balance.
7. MAGAZINE SUBSCRIPTIONS
If it’s related to your work, then it’s eligible for a write-off, says Shannon Sullivan, accountant with Manning Silverman and Company.