10 Most Overlooked Tax Deductions
Jan 08, 2014 |
The government takes enough money from your paycheck throughout the year — there’s nothing wrong with not paying a dime more than you have to. But many people unwittingly overpay because they missed out on deductions they could have benefited from.
Sometimes tax breaks expire only to be reinstated by Congress. Some deductions are not commonly known and thus missed. And some people just don’t have the time to comb through it all to see what they’re eligible for.
However, plenty of people do take advantage of deductions (you need to itemize, though, which can be a whole other headache). According to TurboTax, the 45 million Americans who itemized deductions claimed a total of $1.2 trillion dollars, while the rest of taxpayers claiming the standard deduction accounted for just $747 billion.
Here are 10 deductions that filers often overlook (in no particular order).
Okay so technically it isn’t technically a deduction. Physician investor readers will be happy to learn that any reinvested dividends aren’t exactly deducted so much as if you pay attention you can avoid being taxed twice. According to Taxslayer.com, many people are taxed once when the dividends are reinvested and later when they are included in the proceeds of sold shares. There are enough costs involved with investing that can eat into a gain — don’t let this happen to you.
“Forgetting to include the reinvested dividends in your cost basis — which you subtract from the proceeds of sale to determine your gain — means overpaying your taxes,” TurboTax explained.
Points on refinancing
Last year would have been a good year to refinance your mortgage. And with interest rates at historic lows, most people probably did so. Any points paid to refinance a home can be deducted on a monthly basis over the life of the new loan.