Are you taking all the deductions you’re eligible for?

If you itemize your deductions on your tax return, be sure to take all the miscellaneous deductions you’re eligible to claim.We hope you haven’t been sick enough to qualify for the medical and dental deduction, which must be more than 7.5% of your adjusted gross income (increasing to 10% next year) before it becomes deductible, but if you were, this deduction will certainly help.Real estate taxes and home mortgage interest can often provide a good deduction, as can your charitable donations to qualified nonprofit organizations.  Moving on down Schedule A, casualty and theft losses are another deduction we all hope we won’t need to take, but if applicable, be sure to claim them.  Beyond those mentioned are job expenses and certain miscellaneous deductions.Many miscellaneous deductions are subject to a 2% limit of your adjusted gross income; that is, if the total doesn’t exceed 2% of your income as stated on Line 38 of your tax return, you won’t be able to take them.  Here are some things you may be able to include:

• Do you have unreimbursed job expenses such as uniforms or tools? Have you incurred expenses while looking for a new job in your same profession?  Do you pay union dues?  Does your employer ask you to travel but expect you to pay your own expenses?  Be sure to save all your receipts, so you can include these expenses on your deductions!  (Note:  If you’re a military Reservist, claim your unreimbursed travel expenses on the front of the 1040 to offset your adjusted gross income.)
• Your CPA will know to include tax preparation fees if they’re beneficial to you. However, if you’re preparing your own taxes this year but paid to have them done last year, be sure to add the amount to your total.
• If you incurred expenses to make or collect taxable income, to manage property that produces taxable income, or even to claim a tax refund, you can also add these amounts.
• Some investment expenses can be included here.
• If you make a small income on your hobby, you can use the expenses (that don’t exceed the income) to offset your profit.  (Note: If you make a large income from your hobby, the IRS will consider it a business and expect you to pay taxes accordingly!)
• Some legal fees can be included.
• If your safe deposit box is not used to store jewelry and personal effects, you can include its cost with your miscellaneous deductions.

Some miscellaneous deductions are not subject to the 2% limit, including:

• Casualty and theft losses from income-producing property.  If your art collection or gold nuggets are stolen, this would be the place to claim them (assuming the insurance company didn’t reimburse you).
• Gambling losses (but not to exceed the amount you won).
• If you have a disability and consequently incur impairment-related work expenses, claim that amount here.
• Losses from Ponzi-type investment schemes.

Whether you incurred expenses or were unfortunate enough to suffer losses, be sure to inform the IRS and take advantage of the deductions for which you’re eligible.