Tax breaks can provide fast cash for consumers
Finding additional tax deductions
In today’s economy, almost everyone is looking for fast cash and using tax deductions may be a solution. The tax laws are always changing and new deductions are brought to the market. Unfortunately, not everyone is aware of them. Here is a list of the deductions that are most overlooked by taxpayers.
A home sale
Owning a home gives taxpayers a benefit of hefty write-offs. They run from property taxes to mortgage interest deductions. For homeowners who sold their home, there are also benefits. They can deduct the amount of property taxes they paid while still in the home and the commission paid to an agent during the sale. Any other fees incurred at the closing can also be deducted from a tax liability.
Taxes on a car purchase
Anyone who bought a car in 2009 paid sales tax on the purchase. Some states tax car buyers every year. For example, Kentucky believes the continued taxation is a tax for “the privilege of using a motor vehicle upon the public highways.” If a consumer lives in a state that adheres to this taxation, he or she can deduct a percentage of the tax as part of a “personal property tax.”
Charity items and deductions
Donations are another tax deduction that can substantially reduce a consumer’s tax liability. Cash, household items and clothes all can add up for the deduction. Consumers also can add appraisal fees and any other fees associated with the donation. If the item is valued greater than $500, they are required to provide an appraisal along with tax documents. Anything such as a big-ticket appliance, furniture, electronics or vehicles need to be professionally appraised to assure the value is accurate prior to filing.
Deductions for time donated to charitable organizations
For people who donate time and other efforts to charity, they also can use additional deductions. Consumers who volunteer in a local community driving a bus or car for charity can deduct transportation or mileage logs for the vehicle. They can also deduct receipts for tolls and parking. Fast cash can be found for those who donate time if they keep clear records of any payments made. The IRS requires documentation, but it can be a considerable deduction.
Cleaning bills can be deducted
Most travelers deduct airline costs and hotel for business, but not everyone knows they can deduct cleaning bills, too. Consumers should keep all receipts from Laundromats and cleaners. This is a business deduction and taxpayers can use it when the total pushes them over the 2% limit for miscellaneous deductions.
Any shipments made for work purposes can be deducted. That includes documents, baggage and displays too large to travel with consumers. These will be part of the miscellaneous deductions. Some airlines even increase the cost of travel by charging to check baggage, and this too can be added to the deduction. Consumers need to keep all receipts and have records to prove the charges were made.
Finding lesser-used deductions
Using the lesser-known deductions is a great way to find fast cash that can reduce a tax liability. The key is to keep all documentation for each deduction and be ready to produce them if requested. The above deductions also fall under the heading of miscellaneous deductions and all are “below the line.” That means that consumers can take the deductions after they have calculated their AGI, adjusted gross income. Then they have to itemize the deductions on a Schedule A. The sum of the total miscellaneous deductions has to be more than 2% of the AGI. For example, if an AGI is $80,000, all miscellaneous deductions must be more than $1,600. Though there are some regulations and rules to follow, they can be helpful if managed correctly to minimize tax liabilities.