The most recent data reveals that the 45 million Americans who filed taxes claimed over a trillion dollars in deductions. And out of that giant number, over seven-hundred million dollars were from the standard deduction alone. And, to be honest, many of the people who took the standard deduction probably had the right to a larger deduction. Below are three deductions to consider when filing taxes.
1) Dividend Reinvestment
While this isn’t a literal deduction, it is a big money-saver during tax season.
Many investors have mutual funds or a similar investment that pays dividends. And many of these investors choose to have these dividends automatically reinvested. This grows an investors tax basis in the fund. If an investor has a larger tax basis, they have smaller capital gains. Since capital gains are what’s taxable, a smaller capital gain equals smaller tax fees.
For an investor to make sure they’re not overpaying in this scenario, they need to be sure to include these investments in the cost basis when filing taxes.
2) The Cost of Moving to a New Job
Some tax rules are strange. While the cost of looking for a job is not deductible, the cost of moving for one is.
This is an easy write-off to take advantage of because it’s not an itemized deduction. This means it’s not necessary to list every cost of moving.
Instead, as long as the move was more than fifty miles, taxpayers can deduct twenty-three cents a mile for the move, fees from the trip, and tolls.
3) Older State Taxes
If a taxpayer paid state taxes the previous year, that amount is a deductible for the next year.
Also, taxpayers can write-off the state income tax that was withheld. While these two deductibles are often overlooked and certainly aren’t intuitive, they can greatly reduce the cost of state taxes.
If someone has put off filing their taxes this deep into the season, they likely need every discount they can get. Luckily, there are a bunch of unusual ways to save money when it comes to taxes. Investors, movers, and someone who simply paid their taxes last year can benefit from the tips in this post and lower their tax costs this year.