NEW YORK (Reuters) - Americans claim more than $1 trillion worth of deductions at tax time. And whether you think the tax code should have more write-offs or fewer loopholes, you might as well get your piece of that pie while it’s on the table.
That means grabbing every available deduction, even the ones you may not have thought about. Here’s a helpful starter list for your 2012 returns.
If you blinked at year-end, you might have missed the revival of the state sales tax write-off, which lets taxpayers choose between deducting state income taxes or state sales taxes.
That makes it a no-brainer for itemizers who live in Florida or other states without an income tax. While it won't generally make sense for those who live in high-tax states like New York or California, it may be worthwhile for retirees who shelled out for something big, like a boat or a car. For guidance, check out the Internal Revenue Service's online calculator (here ).
You probably already keep track of the money you donate to your favorite causes. You can also write off food you bought for a homeless shelter, pens you donated to an after-school program and the like. And if you drove your car for charity in 2012, you get to deduct that, too, at a current rate of 14 cents per mile.
If you scoured your closets for clothes to send to Hurricane Sandy victims, don’t undervalue them. You can use software like ItsDeductible from Intuit Inc., publisher of TurboTax, or H&R Block Inc.’s DeductionPro to come up with the right value. And yes, you’ll need receipts.
You’re allowed to write off up to $2,500 a year in student loan interest, and you can claim it even if you don’t itemize your deductions, though there are income limitations. If you paid extra in an effort to pay down the loan faster, you can deduct the interest portions of those voluntary payments, too.
The IRS has a much more lenient description of medical costs than your health insurer probably does. Lots of expenses, including breast pumps and their accessories, eyeglasses, hearing aids, acupuncture treatments and weight-loss programs are often deductible. So is the travel to your doctor’s appointments (whether in your own car, at 23 cents per mile, or by taxi). Want a laundry list? Get a copy of the IRS’s Publication 502.
Of course, there is a catch: You can only deduct the amount of medical expenses that top 7.5 percent of your adjusted gross income.
Families with children get to count their kids as dependents (the exemption is worth $3,800) and take the child tax credit ($1,000 per dependent child under the age of 17). If you have kids, you probably are well aware of that. You may not realize that you may be able to count your aging parents (or other relatives) as dependents as well. The rules are tighter here: In general, your parent must make less than $3,800 (excluding Social Security), and you (along with siblings) must pay more than half of her bills.
THE HIGH-END LINKEDIN SUBSCRIPTION
Job switchers, take heart: You can deduct the costs of preparing your resume, traveling to interviews, outplacement fees and other job-hunting necessities. And if you take a job at least 50 miles away, you can write off the cost of that move. While job-hunting costs get lumped into the miscellaneous deduction (which you can only take once it’s above 2 percent of your adjusted gross income), there’s no such limit on moving expenses. In fact, if you qualify, you can get the tax write-off even if you don’t itemize.
Fees for financial advisers are deductible. So is the cost of traveling to meet with your financial guru in person, and subscriptions for financial publications. But sorry: Costs to go to investment seminars and hear get-rich-quick schemes are not generally deductible.
Self-employed workers get a grab bag of deductions: the home office (don’t forget the pro-rated electric bill, homeowner’s insurance and cleaning costs for that part of the house), health insurance and whatever subscriptions, books and conferences you need to keep the business going. And if you bought a new laptop, set up a new phone system or purchased some other big-ticket piece of equipment for your business, you can write off the cost immediately rather than depreciating it over time, a difference that may sound ridiculously geeky but can be extremely valuable.
If you struggled through negotiations with your lender last year that resulted in part or all of your mortgage debt being forgiven, you don’t have to report that amount as income, as long as it was for your primary home. And you can deduct private mortgage insurance, the coverage that lenders typically require for those who make downpayments of less than 20 percent, though income limits apply to this one, too.
OK, so you probably didn’t forget your individual retirement account or other retirement plan contributions. But this is a big item and one of the only ones you can still change for the 2012 tax year.
Don’t forget that you have until April 15 to sock away $5,000, ($6,000 if you’re 50 or older) into an IRA. Depending on your income and work situation, this might be a deductible IRA or a Roth IRA. Whether you get a tax break now or later, in a couple of decades you’ll probably be happy you remembered this one.
(The author is a Reuters contributor. This is part of a five-story package on tax planning, which runs March 12 to March 14.)
Editing by Chelsea Emery, Linda Stern and Douglas Royalty