Don’t overlook these lesser-known deductions as you crunch tax numbers

March 23, 2014 

Did you lose your job last year? Buy a new car? Volunteer? All of these activities — and more — could make you eligible for breaks that could trim your tax bill.

Job-hunting expenses. If you looked for a job in your same line of work, then transportation, food and lodging, postage, and other costs can be deducted as a miscellaneous expense, even if you didn’t land a job. To claim this deduction, you must itemize, and you can only deduct expenses that exceed 2 percent of your adjusted gross income. Expenses associated with landing your first job don’t qualify.

Moving expenses. If a job change led you to move, your expenses are deductible, as long as your new job is at least 50 miles farther from your old home than your old job was. You don’t need to itemize to claim this deduction, and you can claim it for moving to your first job. For a full list of deductible moving expenses, check out IRS Publication 521.

State sales tax. Taxpayers who itemize have a choice between deducting state income tax or state sales taxes paid in 2013. If you live in a state with no income tax, deducting sales tax is clearly the way to go. Taxpayers who bought a big-ticket item may get a bigger deduction from state sales tax even if they live in an income-tax state. The IRS has tables that show how much residents of different states can deduct, based on their income and state and local tax rates. (This tax break won’t be available in 2014 unless Congress renews it.)

Costs of volunteering. You probably know that you can deduct charitable donations. But you may not know that out-of-pocket costs associated with volunteering, such as groceries for a nonprofit soup kitchen, are also deductible, provided you itemize.

Long-term-care insurance. Only unreimbursed medical expenses that exceed 10 percent of your AGI (7.5 percent if you’re 65 or older) are deductible. You may have a better chance of crossing the threshold if you pay for long-term-care insurance. Taxpayers who were between 50 and 60 at the end of 2013 are eligible to count up to $1,360 of their premiums as a medical expense; those between age 60 and 70 can count up to $3,640.

Reservists’ travel expenses. If you’re a member of the National Guard or military reserve, you may be able to deduct the cost of traveling to drills or meetings. To qualify, you must travel more than 100 miles from home and stay overnight. Deductible expenses include lodging, half the cost of your meals and a driving allowance, plus parking and tolls.

Sandra Block is a senior associate editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.

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