If you're like most of us and are looking to increase your tax refund or lower your tax bill, you should make sure you pay special attention to little known tax deductions. Failure to do so means you could be leaving hundreds or thousands of dollars on the table when you file your tax return.
From exceptional business expenses to landscaping expenses, there are several little known tax deductions and credits designed to make this year's tax season the best ever. Let's take a closer look at a few little known tax deductions for small businesses, LLCs, and individuals you may be missing out on.
Little Known Tax Deductions for Healthcare
Whether you're an independent contractor, sole proprietor, or partner in a company, medical expenses can quickly destroy virtually any budget. Fortunately, the Internal Revenue Service recognizes the potential impact of insurance premiums and offers some assistance.
If your medical expenses are more than 7.5% of your AGI, you may be eligible to claim it as an itemized deduction for the 2018 tax season. Moving forward after 2018, the threshold to claim itemized medical expenses goes to 10% AGi.
However, if you are responsible for your own healthcare (as with self employed people), you may be able to deduct up to 100% of the cost of your premium. In this instance, the deduction is taken off your AGI instead of an itemized deduction.
Little Known Tax Deductions for Weird Business Expenses
We get it - everyone's business is different. If you have a unique (and documented) business expense that you use to benefit your business, you may be able to deduct it from your income. For example, cosmetic surgery costs are almost always non-deductible. However, Chesty Love, an exotic dancer, put this standard to the test, and won!
She decided to undergo breast augmentation to earn larger tips. When she tried to write off the bill, the IRS said the augmentation was a nondeductible cosmetic surgery. Yet, in Hess v Commissioner, the Tax Courts approved tax benefits and allowed her to use her implants as a type of stage prop and write them off as a depreciable asset.
Little Known Tax Deductions for K-12 Teachers
Teachers are very very special people! While underpaid, teachers often reach into their own pocket to ensure their students have what they need. As a matter of fact, nearly all public school teachers report digging into their own stash to purchase school supplies — spending almost $480 a year.
Even though it may seem like no one appreciates what educators do, the IRS allows K-12 teachers to deduct up to $250 for materials. This number is subtracted from the educator's income, so they're able to take advantage of this deduction — even if they don't itemize.
Little Known Tax Deductions for Lifetime Learners
College students have access to a number of different tax deductions. However, this doesn't mean those who have previously graduated can't take advantage of tax deductions. The Lifetime Learning Credit means you can deduct up to $2,000 a year, slashing up to 20% off the initial $10,000 you spend on higher education. Although this tax deduction does phase out at higher income levels, you can take advantage of it regardless of your age.
Little Known Tax Deductions for Home Office Expenses
Do you work from home and operate a home office? If so, you know home office deductions are typically scrutinized under a microscopic lense. As a result, it should come as a surprise someone actually deducted their home landscaping costs...and won. In the case of Langer v Commissioner, a home business owner regularly met with different clients in his home.
Because of this, he rationalized it was to the detriment of his business to keep his home landscape pristine and in immaculate condition. While the entire cost of landscaping wasn't tax deductible, the Tax Courts allowed a deduction for a portion of the landscaping costs, driveway repairs, and lawn care.
Contact John F. Dennehy CPA
When it comes to maximizing your taxes, it's best to make it a year-round process. And when you partner with John F. Dennehy CPA, we'll work around the clock to ensure everything is in order and make sure your maximizing every possible tax deduction. This way you can focus on more important things like growing your business or simply living your life.
In addition to tax planning solutions, we offer a range of services designed to make your personal and business life easier, including:
Contact John F. Dennehy CPA today for professional tax planning and to ensure you're not missing out on any other little known tax deductions.