If you have investments, such as stocks or mutual funds, the fees and commissions you pay to buy and sell directly reduce your profit (or increase your loss) when you sell. (Your broker reports on your 1099-B the cost basis inclusive of fees to purchase, and reports the sales price minus what you paid to sell.) Since these fees are already accounted for, they’re not deductible elsewhere on your tax return. But you can deduct a range of other investment-related expenses to your miscellaneous deductions on Schedule A.
Gay marriage, though legal in a number of states, is not recognized by the Federal Government. This means, among a whole host of other issues, that same-sex couples do not enjoy the same tax breaks as married heterosexual partners in the United States.
As frustrating as that may be, the good news is there are still ways you can lower your tax bill come the tax filing deadline. And this advice isn’t great just for same-sex partners – any unmarried, financially interdependent couple can benefit from the following tips.
Ways to Reduce Your Tax Burden
Are you considering transferring wealth, assets, or property to your heirs? You may be in for a much more difficult – and costly – effort than you realize. If you’re in a position to help out younger family members or friends, or if you’re wondering how best to transfer your estate after you pass on, it’s important to be aware that it isn’t always free.
Some gifts are not subject to tax, but many are. A quick study of the IRS gift tax regulations can prevent you from taking an unnecessarily large tax hit and help you plan how to best transfer your wealth. In addition to familiarizing yourself with IRS gifting rules, it’s also advisable to contact an estate planner or attorney to make sure your heirs receive everything they’re entitled to.
As any parent knows, dependents are a great way to get tax deductions. Everyone in the U.S. is eligible to receive a “personal exemption” of $4,000 on their taxes. However, if they don’t support themselves (children, for example), their personal exemption can be transferred to the person who does support them (such as their parents), by claiming them as dependents.
If you support people in your household, each one may be considered a dependent – and can reduce your taxable income by $4,000. However, there are specific rules that must be met in order for this to occur.
When you start your own business, it can seem like there’s always something else to spend money on to keep things running smoothly. Fortunately, many of these expenses are tax-deductible. The IRS defines a deductible expense as something that is ordinary and necessary – in other words, it must be something you need to run your business, and that is commonly used by others in your line of work. For example, a mobile dog groomer could reasonably write off a new washtub. However, it might raise some eyebrows if a graphic designer put a bathtub on the company credit card.
Simply put, the home office deduction allows you to deduct a portion of the cost of running your home as a business expense, proportional to the amount of your home you use for business. You can also take this deduction if you have been asked to work at home by your employer.
This can save you a lot of money if done properly – but you need to be careful, as it is one of the most commonly abused tax deductions.
Admit it. At some point during tax preparation, a dangerous thought may cross your mind: What if I just don’t file? And while you likely file your taxes anyway, you may wonder, what happens if you can’t pay your taxes, or if you just don’t file at all?
Here are some of the details on tax evasion, including some of the penalties involved, as well as what you can do to prevent a sticky situation – even if you can’t afford to pay.
Passing Up the Tax Paperwork
If you are an employee and spend your own money on business travel, or are presently searching for work, you may be able to deduct work-related expenses on your taxes. These expenditures can add up greatly over time, but by being aware of which expenses provide tax advantages, you can greatly offset their cost. Knowing which expenses you can deduct under what circumstances can help maximize your refund or reduce the amount of tax you owe.
Uncle Sam wants you to save for retirement. However, saving for retirement can be difficult, especially if your income isn’t very high. The saver’s credit – in IRS parlance, the “Credit for Qualified Retirement Savings Contributions” – can help by giving you up to a $1,000 nonrefundable tax credit.
To take advantage of this credit, you need to make a contribution to a traditional or Roth IRA by April 15, 2016, or have contributed to your 401k (or similar workplace retirement arrangement) by December 31, 2015. In addition, you must meet the income restrictions for your filing status and other requirements as well.
Did you recently move for a new job? If so, you may be able to claim your moving expenses as a tax deduction. After all, moving can be expensive, especially when you factor in labor, renting a truck, paying for gas, or hiring a moving company outright. Taking this tax deduction allows you to offset the high cost to move by reducing your tax bill.
In order to qualify for the deduction, make sure you meet the following requirements and fill out Form 3903.
Requirements for Moving Expense Deductions
The IRS has a few general guidelines regarding who qualifies to deduct moving expenses.