On Tuesday, I offered three types of deductions that make life a little easier for the self-employed. I also want to offer some tax-saving tips for you wage earners who may not think you have much to expense. Here are three deductions you shouldn’t miss:
1.) Unreimbursed Employee Expenses: Even if you’re not self-employed, you probably engage in activities related to your job that you can expense, if the costs aren’t reimbursed by your employer. Expenses like union or professional dues, travel and entertainment costs, or even local lodging relating to work. You can find an extensive list in Publication 529. Keep in mind, though, you have to itemize in order to take advantage of these deductions.
2.) Student loan interest: This is a big one for most of us Generation Xers and Millennials, as it might give you a little break from your enormous student loan payments. If you qualify, you can reduce your gross income up to $2,500 of the loan interest that you paid. One of the main hurdles here, though, are the income limits. The amount you can deduct is gradually reduced when you Modified Adjusted Gross Income (MAGI) falls between $65,000 to $80,000 if you file as single or $130,000 to $160,000 if you’re married filing jointly. You’re likely paying a lot more than $2,500 in interest, but hopefully this deduction can put some money back in your pockets. Publication 970 has all that you need to know about the student loan interest deduction and other education related adjustments and credits.
3.) Moving Expenses: This deduction has helped many of my clients this year. If you’ve moved to take or start a new job, you may be able to deduct some of your moving costs. Your move has to be a) closely related to the start date of your work, b) for a new job that is at least 50 miles farther from your old home than your old job location was from your old home, and c) you must work full-time for at least 39 weeks during the first 12 months following your arrival at your new job location. You can deduct car expenses like gas and tolls or take the standard mileage rate of 23.5 cents a mile. You can also deduct the cost of connecting and disconnecting utilities, packing and transporting your stuff, and even storing your belongings. See Publication 521 for more costs you can deduct.
You can save on your taxes in many ways this year, whether you’re an employee or self-employed. I explore even more deductions in my primer on filing income tax returns. Don’t leave any more money on the table than you have to.