Last Minute Tax Deductions for 2010

by Kevin on April 11, 2011

You have one week from the time this post goes live to file your taxes for 2010. That’s April 18th — not April 15th — this year. If you still haven’t filed your taxes here’s a list of deductions you might forget to claim this year. Forgetting deductions means you don’t get as much money back on your return as you possibly could. You’re giving the government money that is rightfully yours thanks to tax laws.

Forgotten Deductions

  • non-cash charitable deductions – Did you donate a lot of clothing, toys, or furniture to a charity last year? The value of those items should be added to your deductions. But be careful! Figuring the value of non-cash donations can be tricky and overvaluing an item can come back to bite you. Even if you paid $100 for that shirt 10 years ago, it is probably only worth $3 (or less) today if it is in average condition. You also need to have solid documentation of your donation, especially if you are claiming an abnormally high amount. Getting a blank donation receipt from the charity is not enough. It needs to be filled out completely, and having photo documentation will protect you if you are audited.
  • moving expenses when you move for a job – You found a job in this high unemployment economy — congrats! But you had to move over 50 miles to start that new job. You can claim your moving expenses on your taxes. Document the cost of the rental truck and the gas to move your items.
  • state sales tax – Claiming state income tax is most likely the best option if you live in a state with income taxes. However, in states with no income tax (or if you bought a lot of high dollar items last year) then claiming state sales tax can be a nice perk. You’ll need to know how much sales tax you paid, which can be a hassle, but every dollar you can write off counts.
  • educator expenses – Good teachers spend a lot of their own money on the kids in their classrooms. The government recognizes that most school systems barely have enough budget to go around and a lot of burden is placed on teachers. Teachers can deduct $250 to offset some of the costs of running a classroom every year.
  • car sales tax – This goes along with paying state sales tax. If you bought a car last year you paid (or should have paid!) sales tax on the purchase. Don’t forget to add that to your taxes.
  • adoption and foster care expenses – Adopting or fostering kids is an expensive process. The government allows a deduction of some of these expenses. How much? Enough to net this surprised family a $54,000 refund this year. Seriously.

Common Deductions

You should know about these, but just in case:

  • tax-deferred retirement contributions – That money you are wisely setting aside in a 401k, 403b, or Traditional IRA earns you a tax break this year. You will have to pay the tax piper — in retirement. (If you choose to save in a Roth IRA you pay taxes now and never again. I prefer this method.)
  • mortgage interest – Mortgage interest is one of the most commonly touted tax deductions. There’s a big shocker here, though: your mortgage may not be saving you anything in taxes.
  • charitable donations made in cash – Wrote a check to your church or favorite eligible non-profit? Enjoy the tax benefit while feeling good about making a difference.
  • state income tax – You can deduct either state income tax or state sales tax. Income tax is usually the better of the two deductions.
  • energy saving home improvements – If you make improvements to your home last year that “greened” up your home, you might be able to deduct some of the expense or get a tax credit.

Tax Software

You would be crazy to do your taxes by hand. There are simply too many forms to figure out, and the laws change every year. Either use a professional to do your taxes or use a quality tax software. Good software should catch all of the above deductions (even the forgotten ones) by asking you questions about what happened or changed in your life during the tax year. Hopefully those forgotten deductions aren’t really forgotten at all.

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