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- Moving Expenses for Your First Job. You can deduct your moving expenses for job relocation purposes. If you have moved over 50 miles, you may deduct 20 cents per mile, parking fees and tolls. You may also deduct your car expenses and the costs of moving yourself and your belongings to your new home.
- Student Loan and Interest Paid. Previously, the IRS required that you pay student loan interest to qualify for the deduction. If your parents pay back your student loan, the IRS now views this as your parents giving you the money so that you can pay your debt. If you are not being claimed as a dependent, you can qualify to deduct up to $2,500 of your student loan interest paid by your parents.
- College Tuition. If your income is too high to qualify for the Hope Credit or Lifetime Learning Credit and you paid college tuition for yourself, your spouse, or your dependent, you can still deduct up to $4000 on your return. This can really offset your income and give you a break on your tax liability.
- Out of Pocket Charitable Contributions. You may be able to list out of pocket expenses you incurred while working or donating for charitable purposes. For example, if you prepare dishes for a nonprofit organization, you can list the cost of the ingredients you purchased.
- Child Care Credit. It is easy to overlook the child care credit if you pay your child care bills through a reimbursement account at work. You will be able to list up to $6,000 in child care expenses. However, if your expense is paid through a work account, you can only list up to $5,000.
- Military Reservists Travel Expenses. If you are a member of the National Guard or Military Reserve, you may qualify for a deduction for travel expenses to drills and meetings. In order to qualify, you must travel more than 100 miles and be away from home overnight. If you drove your own vehicle, you can deduct 48.5 cents per mile plus the cost of lodging and half the cost of your meals.
- Estate tax on income in respect of a descendent. If you withdrew money from an inherited IRA, you may deduct whatever taxes you paid from the amount you withdrew.
- $250 Educators’ Expenses. Both teachers and aides can deduct up to $250 they spent in 2008 for books and classroom supplies. You can get this deduction whether or not you itemized.
- State Tax you paid Last spring. If you owed tax when you filed your 2007 state tax return, you may list this as a state tax deduction for your 2008 tax return.
- Jury compensation paid to Employer. In many scenarios, employers require you to surrender your compensations from jury duty pay in exchange for your regular salary during the period you were fulfilling your civil duties. Even after passing this money over to your employer, the IRS still considers this to be taxable income. Therefore, you have the ability to deduct this amount as a job expense whether or not you itemized.
Archive for December, 2008
10 Most Commonly Missed Deductions
Monday, December 22nd, 2008IRS Increases Mileage Rates
Monday, December 22nd, 2008As of June 23rd, 2008, the IRS has increased the optional standard mileage reimbursement rate by 8 cents which is in effect for the last 6 months of tax year 2008 (July 1—December 31). For any business miles driven from January 1st through June 30th, the rate stands as 50.5 cents per mile, 19 cents per mile driven for medical or moving purposes and 14 cents per mile driven in service of charitable organizations. The new rate applies to qualifying expenses that have incurred on or after July 1st. As of July 1, 2008, through Dec. 31, 2008 the rate is now increased to 58.5 cents a mile. Therefore, it is important that the qualifying miles incurred between January 1, 2008 and June 30, 2008 are recorded separately from the miles accrued on and after July 1. When filing at RapidTax.com, we’ll automatically apply the appropriate calculation on your business miles.
“Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile.”
- IRS Commissioner Doug Shulman.
Generally, the IRS adjusts the standard mileage rates annually based on a yearly study of the fixed and deductible costs of operating an automobile for business, charitable, medical or moving purposes; however, due to the increase on gas prices, the rate has been updated to accommodate the rising cost. Since this increase also applies to medical and moving miles, they have also been changed from 19 cents per mile to 27 cents per mile.
The IRS has already acknowledged the recent drop in gas prices towards the end of 2008. In result, the optional standard mileage rate for 2009 has decreased to 55 cents per mile, a slight adjustment from the 58.5 cents per mile mentioned above. Miles for medical or moving purposes will be calculated at a new rate of 24 cents per mile and 14 cents per mile for service of charitable organizations. These new rates will not effect the upcoming tax year, but rather your 2009 taxes to be completed in 2010.
For more information, refer to IRS Announcement 2008-63.