The Top 7 Tax Deductions to Maximize Your Return in 2017

The daughter of a CPA, my memories of tax season growing-up weren’t great – my dad spent most nights and weekends at the office, and was stressed from New Year’s Day to Tax Day.  I’m not kidding when I say April 16 was celebrated as a holiday in our home.

Which is why, as an adult, it’s a wonder I actually enjoy preparing our annual return.  Seriously… every year I eagerly anticipate the receipt of each form and ritualistically on January 1st, I start compiling a file of all our other paperwork.  I get giddy over completing our yearly 1040 form for the same reason that points, miles and portals get me excited: I enjoy seeing how my savvy can save or make us money.

Investing time into preparing for and compiling the necessary documents well before visiting your tax professional or logging-in to your online software of choice will help you get a larger refund or owe less, depending on your situation.  If you’re one of the millions of Americans who benefit from itemizing qualifying expenses on their return (versus taking the standard deduction), here are a few common deductions to consider:

Mortgage interest, insurance and points – Interest paid on your primary owner-inhabited residence is  typically deductible.  Points paid during refinancing can be deductible.  And in limited instances, if you pay private mortgage insurance (PMI), that expense may also be deductible.

Student loan interest – You can deduct up to $2,500 of interest paid on some types of student loans.  This is claimed as an adjustment to income, so you don’t even need to itemize to benefit.  However, the amount of your deduction is reduced if your modified adjusted gross income (MAGI) is between $65,000 and $80,000 as a single person, or between $130,000 and $160,000 if filing jointly.  Singles with a MAGI of $80,000 and married couples with a MAGI of $160,000 no longer qualify for this benefit.

Charitable giving – If you made donations to your church or a qualifying charity, you can deduct those full amounts so long as you have a written record of the qualifying donation and no goods or services were received by you for the gift.  In addition to monetary gifts, you can also deduct in-kind donations like clothes and home goods.  Websites and apps like ItsDeductible can tell you the deductible value of these items.  And even though your time spent volunteering isn’t deductible, your mileage driving to and from volunteering is deductible.  Since 2016 was an election year, it’s important to note that campaign contributions are not deductible, neither are gifts to individuals even if they’re given through sites like Go Fund Me.

Medical, dental, vision and mental health expenses – If they exceed 10 percent of your MAGI, you can deduct your expenses associated with the prevention, diagnosis and treatment of injury or illness.  You can also deduct the cost of transportation, health insurance premiums, prescription drugs, and non-cosmetic procedures.

Taxes paid and tax return – Eligibility varies, but you may be able to deduct personal property taxes, such as those paid to the state for a vehicle or boat.  While you might be able to deduct this and other state taxes, federal taxes, including penalties and interest owed are not deductible.

If this cost combined with other miscellaneous deductions (several of which are mentioned below) totals more than 2 percent of your income, you can deduct the cost of tax preparation software or the fees associated with hiring a Certified Professional Accountant (CPA) to prepare your annual return, provide advice on tax issues, or assist you during an audit.

Job search and moving expenses – If you are applying for positions in the same line of work as your previous job and the combined costs exceed of this and other miscellaneous deductions total 2 percent of your MAGI, you can deduct unreimbursed recruiting and employment agency fees, the cost of printing business cards, advertising and resumes, and travel and hotel expenses.  Unfortunately, the same expenses cannot be deducted if you’re new to the workforce and looking for your first job.

If you moved more than 50 miles for a new job or to start a business, you can also deduct your out-of-pocket moving expenses, including mileage, parking fees and tolls.  Obviously, if you received a relocation stipend from your employer, you are ineligible for this deduction.  You can take this deduction for your first job.

Educator expenses – Teachers can deduct up to $250 (or $500 if both spouses are eligible educators), for unreimbursed purchases like books, supplies and equipment, including computers and software, as well as the cost of relevant professional development courses.

The deadline for filing your 2016 return is April 18, so you have three extra days this year to make sure you’ve accounted for every single deduction that will benefit you.   

And if you’re filing online, don’t forget to use a portal!  Both Ebates and MrRebates.com offer cash back from H&R Block and TurboTax online or you can earn 1,000 miles by going through Southwest’s Rapid Rewards shopping portal.

Disclaimer:  Many of the deductions mentioned above may have other qualifying criteria not expressly mentioned.   I am not a tax or accounting expert, so I encourage you to seek the advice of a professional to confirm your individual eligibility for these and other deductions and credits.

3 comments

  1. Oh, how I wish that we didn’t have the benefit of having Student Loan interest to deduct! 😉 Thank you for the comprehensive list. Have you used “It’s Deductible”? I would love to see reviews on how well it works when used year round.

    1. Hi Melanie! Thank you for stopping by!! You’ll be rid of that stubborn student loan soon. I’ve only used “It’s Deductible” when logged-in to Turbo Tax. I’ve never used it outside of the immediate act of preparing and filing our return. I should look into it though, as it has to be better than the haphazard way I’m tracking (?) our charitable giving.

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