The ordinary tax filer finds difficulty in keeping track of every single tax breaks that the IRS offers. It is important for a tax filer to know these tax breaks and deductions that he might be missing out on, so that he can take advantage of them before the April 18 deadline catches up on him.
When they process their income tax returns, many people think that they have already factored their tax breaks and deductions correctly. However, oftentimes, there are last-minute deductions that they don't include.
1. Miles driven between jobs
"If you drive your car between two different employers, that mileage is deductible, provided you drive from one employer location to a different employer location," stated Kenneth Reid of MasterType Accounting and Business Services in Chicago, Ill.
2. Tools and supplies
For people who need to purchase tools and certain supplies to perform their work or business, their expenses for such items are tax deductible.
3. Payments on alimony
"Alimony payments are a hard-fought battle in many divorces, and no one wants to pay them," said Michael Eckstein of Eckstein Tax Services in Huntington, N.Y. "But, for the person stuck paying them, they're tax deductible," he added.
4. Investment related expenses
If a taxpayer hires the services of a financial professional and as long as the fees do not exceed 2 percent of his adjusted gross income, he is eligible for a tax deduction. The cost of tax advice, tax preparation and legal fees spent on collecting taxable income are also tax deductible.
When it comes to paying taxes, a taxpayer should only pay only what he is supposed to pay and not greater. There are two types of tax deductions he can choose from: the standard deduction or the itemized deduction. He should figure out which one will enable him to pay just the right amount of tax to the government.