Possibly fearing retaliation by the IRS, many taxpayers do not take advantage of certain available deductions. You do have a legal right to take these deductions without fear of an IRS audit.
Unfortunately, the failure to itemize these deductions only results in you paying more to the IRS than is necessary. Millions of Americans, including Michigan residents, are simply not aware that such deductions exist.
Some examples of tax deductions frequently missed include:
- Charitable contributions: Often we donate personal items to charities without asking for a receipt. Such a receipt can justify taking the deduction on your tax filing to the IRS.
- Tuition and other educational fees: When working towards a degree, you may be entitled to write such expenses off. This is especially useful for parents putting their children through school.
- State and local sales tax: This is especially helpful if you live somewhere that does not require paying state income taxes.
- Earned income credit: For lower income individuals, this credit can result in significant refunds that are potentially worth thousands of dollars. Approximately 20 percent of filers do not take advantage of this credit when available.
- Job searching expenses: You may deduct costs for a job search, even if the search proves to be unsuccessful.
- Retirement savings: It's possible to put money towards retirement while also receiving tax credits.
- Losses due to gambling: Such losses are deductible, but can never exceed gambling winnings.
Just as a warning, do be careful to document any deductions and avoid taking any deduction that is questionable. A seasoned tax attorney can advise you regarding your various deductions, and the possible ramifications of taking an improper deduction.