Most Overlooked Tax Deductions

For some unexplained reason, many of us simply hate paying income tax. The issue though unresolved stands quite strongly, in the minds of the people so much so that, the Internal Revenue Service, abbreviated as IRS is sometimes sarcastically quoted to be the 'income robbery services'. Well, sometimes my over-patriotic self feels like yelling, 'dude the jets that defend our nation, don't run on water, well at least for the time being, and nor does the White House or the Capitol building have a money plant garden'.

Well but the point stands, nobody likes paying taxes. Well I keep telling you that my right hand side pocket is being emptied by the government and the left hand side pocket is being emptied by my wife and daughter. Well let's not get into public finance, I will become so sad that there will be a heap of tissues on my desk by the time we are done. Though the government taxes us, it leaves behind some really good tax deductions for our convenience. Problem is, we avail some really good ones but we do miss out a significant number of sneaky, snickering deductions that are snorting right under our very noses, on the top of IRS Publication 590. This general list of tax deductions, chiefly encompasses some solid leads which you can consider as a deduction.

List of Most Overlooked Tax Deductions

Now when we go up to the Form 1040, we calculate or rather total out our annual income and then derive our adjustable gross income. If we plan ahead or just keep on reading about tax implication of every possible transaction, then of course we will notice that we have missed out quite a lot. To be accurate an exemption is an expense or a kind of income that is needed and it would be morally incorrect to tax it. So here let's go step by step. If you haven't planned ahead last year then you can use this information this year.

Exemptions on Miles
Your car consumes a ton of fuel every month. You travel down for work, business, to the hospital, for social service, etc. Everything except for joy rides with your lovely wife qualifies for deduction, all you need to do is just figure out what it would fit into. Meeting with client? Clock down the miles and claim. Taking grandma to the hospital for a check up? Again clock down the miles. Anything and everything that come under travel for health, business, employment and education can be claimed as a deduction.

Depreciation on Certain Assets
We use countless assets for non-personal purposes. Cell phones, computers, hard disks, and what not. At home, at the office and also in case if you are self-employed, you can deduct depreciation from several assets.

Costs Related to Real Estate
Expenses that are solely related to your personal real estate tend to have great deduction grounds. For example, mortgage loan interest, closing costs, commissions and other costs that are not included in the cost of the real estate. Also do not forget the depreciation expenses.

Health and Medicine Related Expenses
Medical and health related expenditures are completely deductible. There is, however, an upper limit for the same. There are also some medical expenditures such as cosmetic expenditures which are not deemed to be deductible. However you will be surprised to know of the following deductions. Contact lenses, hearing devices, glasses, contraceptives, rehabilitation treatments, etc. Medical expenses with tax deductions have a certain upper and lower limit as well as qualifying conditions.

Insurance and Interest
Interest from government securities such as municipal or savings bonds, investment interest from life insurance and other such investments where the government, life or medical insurances come into the picture are opted for deductions.

Expenditure for Seniors and Child Welfare
Lastly all welfare and expenditures that are initiated for your child's benefit are deductible, but are again subject to limitations. Medical expenses are deductible up to a certain limit. Deductions for education and interest for student loans do have limits. Tax exemptions for children are numerous and there are several publications, norms and rules that need to be consulted to claim the deduction and exemption.

This list would churn out an enormous volume of paperwork. Hence, just get out all your bank statements and classify all the expenditures that you undertook in the past year. Total up the classified expenditure and in the process, exclude the ones that would not be able to claim deduction for. Total up the exemption amount. After you have totaled the amounts, you will be able to compute the depreciation. You can also make a personal balance sheet for the same.