I’ve Paid For This Twice Already…

Frugal living and debt reduction tips for a better financial future. This is one family’s story.

November 18th, 2013

7 Lesser Known Methods to Pay Less in Taxes

For any individual running a small business, quarterly tax time is approaching and it’s time to look at the year and assess what you’ve earned. Collectively, Americans will claim over $1 trillion in itemized deductions over the tax year. Those who miss out on deductions are leaving money on the table. If you’re looking for methods to push your deductions past the standard, here are a few less utilized ways individuals manage to do so.

Job Hunting Expenses

If you were one of the millions without work this past year, you can claim the expenses you incurred hunting for employment. This includes printing costs for your resume or business cards, transportation costs incurred getting to interviews and any charges you take when your search takes you away overnight. You can claim up to 2% of your total income in job hunting expenses, so save those receipts!

Remember that as long as the expense qualifies as a deduction, you can claim it whether you landed the job or not. That’s more motivation for you to keep putting yourself out there.

Moving Costs

Did you move during the course of the year for employment purposes? If so, you can deduct those costs from your overall income for the year, but there are a few rules to keep in mind. You must have a job that is at least 50 miles away from your current location, but if you qualify for this deduction you can take it regardless of whether you itemize. You can also deduct the cost of using your car to move to the new destination, great for cross country moves.

Tax Prep Fees

The cost of preparing your tax forms can be deducted from your income for the year. You can also deduct any convenience fees that may come from paying with a credit or debit card. Services like H&R Block or Turbo Tax all count toward this deduction. It’s usually a small deduction, but when you’re itemizing everything counts and they all add up.

Charitable Mileage

In addition to any charitable contributions you make throughout the year, you can deduct supplies you use for charitable purposes. This includes the mileage of your car when you drive for charity (like delivering supplies or dropping workers off at a site), but you can deduct supplies you use as well. Say that you bake a cake for your school’s booster club or volunteer to make juice for your local women’s club. These non-profit contributions toward charity all count as tax deductions.

Retirement Savings

Contributions toward your retirement savings can be deducted from your income for the year. Contributions toward a Roth IRA can be withdrawn without taxes later in life. The lower your income, the higher the deduction you receive from the saver’s credit. This also works for 401k plans, which are now open to individuals. Start saving for retirement – it literally pays for you to do so.

Financial Planning Expenses

If you paid any financial advisors to review your books and help keep you in shape, you can deduct those expenses as well. It’s common for small businesses to hire a consultant early in development so that they can plan projections and sales goals properly. These deductions also include attorneys who may prepare a living will or a trust for your family.

A Word on Deductions

Keeping track of your deductions is much easier if you have a system set up to do so. You can utilize a mobile app like Expensify to track mileage and receipts, or do it the old fashioned way with receipts in a filing cabinet. Be prepared to either show proof of expenses or reconstruct them when it comes time to file. Big deductions come to those who save receipts.

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