We continue with our list of most commonly overlooked deductions from federal income tax returns. Already covered were state sales tax, reinvested dividends, and out-of-pocket costs related to charitable work. Taking these and this next set of items into account when preparing the tax return may result in a greater refund or less money owed on the federal tax return.
You will need:
• Student loan interest statement
• Receipts for job search expenses (for other than first job)
• Receipts for moving expenses for first job
• Receipts for expenses related to military reserve or National Guard drills or meetings
Step 1: Student loan interest is deductible, even if a parent repays it. A child who is not considered a dependent may deduct a maximum of $2,500 in student loan interest paid by parents. Itemization is not required in order to take this deduction.
Step 2: Job search costs can be deducted by those who looked for a job within the same line of work. Expenses include transportation, lodging, and food for overnight trips, cab fares, cost to print business cards and resumes, advertising, postage, and employment agency fees. This are itemized as miscellaneous expenses and can be deducted if the miscellaneous expense line total is greater than 2 percent of the adjusted gross income. This deduction does not apply to people looking for their first job.
Step 3: Moving expenses related to the first job can be deducted if the job is at least 50 miles from the new home. The deduction encompasses the cost to relocate, including tolls, parking fees, and a 16.5-cent per mile 2010 deduction for driving your own car. Filers do not need to itemize to take this deduction.
Step 4: Travel expenses to certain drills or meetings are deductible by military reservists and National Guard members. The travel must exceed 100 miles and include an overnight stay. Lodging expenses, half the cost of meals, tolls, parking fees, and a 2010 rate of 50 cents per mile for driving a personal vehicle are deductible. Itemization is not required to take this deduction.
Step 5: Business owners can deduct health insurance premium costs when calculating their self-employment tax. This is hidden on Schedule SE, line 3.