Tax Deductions Most People Miss On TurboTax

Discover the Most Overlooked Tax Benefits

Reduce your taxes by claiming tax deductions. The following is a list of tax deductions most people miss on Intuit’s Turbotax.

  1. State Sales Tax
    When doing business, payment of sales tax to the state is often necessary. For individual taxpayers, moneys paid towards sales tax can be claimed as tax deduction. For instance, if you purchased a car, you can claim a deduction equivalent to the sales tax rate for your state on the value of that vehicle.

  2. Reinvested Dividends
    This is not really a tax deduction but it can save you a significant amount of money. If you reinvest mutual fund dividends in additional shares, you can increase you tax saving-loss, or reduce the taxable capital gain, when you dispose of your shares.

  3. Personal Charitable Contributions
    The little costs you incur when supporting a charitable cause matter a lot. For instance, if you bought postal stamps to send invitations to potential contributors for a fundraiser, or bought ingredients to make soup for the guests, you can claim the deduction.

  4. Interest Paid on Student Loans by Parents
    If you are not listed as a dependent by your parents, you can claim a deduction equivalent to interest payments made by your parents, up to a maximum of $2,500. The IRS assumes that your parents gave you the money and you made the payments, so you qualify for the deduction.

  5. Moving Expense Related to your First Job
    If you land your first job, which requires you to move from where you currently live, you can take comfort in the fact that you can claim a tax deduction on the moving expense. The best thing about it is that you can still get the deduction even if you do not itemize. The standard rate is 23 cents for every mile, provided you moved more than fifty miles.

  6. Child Care Tax Credit
    This is a credit, not a deduction. It applies to expenses incurred while raising a child. Parents and guardians can claim this deduction if they spent up to $6,000 on child care-related expenses. This tax credit can reduce your tax bill by over $200.

5 Overlooked Tax Deductions From Turbo Tax

Taxes (Photo credit: Tax Credits)

According to the website Turbo Tax, there were over 51 million current tax payers who listed tax deductions over the year 2007. They claimed more than 1.33 trillion dollars in tax deductions. At the same time, more than 91 million people claimed the regular standard deduction. They managed to reduce their tax by 654 trillion dollars. These numbers look good for tax players who are doing standard deductions. However, you need to look at both methods of tax deduction when you are preparing to do you taxes. If you don’t, you may miss out on some great deductions.

The following are five tax deductions that are often overlooked. They are reinvestment dividends, state sales paid tax, charitable contributions, moving expenses and student load tax deductions.

State Sales Tax

This deduction is for people who live in those states without any state income tax. If you live in one of these states, you can deduct this tax. Most of the time, when people file for this kind of deduction, they overlook several things. These include taxes on automobiles, boats, airplanes, any any sale tax they may have spent on building supplies for the home.

Reinvested Dividends

If you have sole any mutual funds during the previous tax year, and have good capital gains, then you should calculate your reinvested dividends correctly and thoroughly. Because the amount that was paid for your investment increases each time that the dividends get reinvested, your capita gain may not be as big as you thought.

Charitable Contributions

Any small items which you may have purchased while volunteering for charities are tax deductible. It is not only the larger contributions that you can receive deductions for, but these smaller ones as well. Keep track of what contributions you have made, such as driving mileage, or any small purchases.

Student Loan Interest

Any interest paid on students loans are able to be deducted. Whether the payment was made by a student or a parent they qualify for this deduction. This is because the IRS counts the interest payment as a gift. This is a good little deduction that students can capitilize on to reduce their tax liabilities.

Moving Expenses

One last good deduction is the moving expense tax. If you just started your very first job any time throughout the previous tax year and have been required to travel over 50 miles for work, this can be be deducted. This tax deduction can be claimed as part of the cost of any driving and the costs of any moving. However, it is only the moving and driving expenses which qualify. Costs of securing the employment are not included in these deductions.