Tax deductions are too important to be ignored or to not know enough about. It would be an odd sort of person who enjoyed completing their tax return but more and more people are opting to fill in their own forms to save money on professional fees. One problem with doing this is that most people don’t know what tax deductions they are entitled to and which can end up in them paying even more tax than necessary. So here’s my very basic cheat sheet that will hopefully reduce the pain of completing your return by pointing out a few tax deductions that you may not know about and save you some money at the same time. The 7 Most-Overlooked Tax Deductions are:
1 Charitable Donations
Everybody knows that pay slips which show salary deductions have to be used when working out how much tax can be deducted as a result of contributions made to charity. Far fewer people know that a number of costs incurred whilst carrying out charity work can be written off. Fuel and transport costs, parking fees and supplies bought on behalf of the charity are all legitimate tax deductions.
2 Eco Friendly Credits
Living a green lifestyle is becoming increasingly popular and now saving the planet may also be rewarded by the tax man. Increasingly the amount of insulation in your home and replacing appliances with those that have an energy star are both supported and will not only lead to cheaper utility bills but will also qualify you for tax deductions.
3 Homeowner Tax Credits
Home buyer tax can create a huge tax deduction for house purchasers but many first time buyers either forget to claim or don’t know that they can. Although there are certain criteria which need to be met and not everybody is eligible for the credit, it is worth checking out if you have moved recently or are planning to move soon.
4 Job Search Expenses
If you have been unlucky enough to lose your job, hunting for a new one can provide some very welcome tax deductions. These include
• The costs of travelling to an interview
• Accommodation and meal costs if an interview means you have to be away from home
• Employment agency subscription fees
• Advertising such as business cards, postage and resumes.
Unfortunately you can’t claim these tax deductions if you are looking for your first job.
5 Relocation Expenses
Although first time job hunters don’t qualify for job search tax deductions, if they find a job more than 80 km away from their current residence, relocation costs such as travel expenses and the removal of household items can be deducted.
6 Health Care Deductions
Although self employed people and business owners miss out on company health schemes, they do have the option of creating their own benefit scheme and claiming the amount spent as a tax deduction. This is quite a complex area of tax and it is probably as well to get advice from a professional regarding writing off the premiums, even if just for the first time you claim it.
7 Tax Deductions for the Self-Employed
Many people that lose their jobs decide to become self employed and this group of people overlook the most tax deductions just through a lack of familiarity. A tax deduction can be claimed if part of the residential home is regularly utilised for business purposes. Proportional rent, repairs and mortgage interest may all be deducted in some instances.
I hope that I have been able to point out at least a couple of tax deductions that you weren’t previously aware of and manage to save you some money. Do remember though that restrictions, regulations and rules surrounding tax and tax deductions change regularly and a professional adviser will ensure your tax return is fully compliant and keep you on the right side of the law. Stop and check if you’re eligible for any of the 7 Most-Overlooked Tax Deductions before you submit returns.