The end of the year and the tax filing season is upon us. As you prepare to gather your tax documents, it’s important to understand all of the nuances for claiming personal tax deductions.
Are job-hunting costs tax deductible?
They are if the the job relates to a similar occupation to your current or previous profession. What does this mean exactly? It effectively means that you aren’t allowed to deduct expenses if you are considering a career change. For instance, it would not fly with the IRS if you tried to deduct expenses associated with becoming a marketing professional, if you are currently a doctor. This also means that recent graduates that have never had an occupation can’t deduct any job-hunting related expenses.
If you do fit the above criteria, you can deduct the following expenses: resume preparation, guidance counseling, head hunter fees and travel costs ($0.555 per mile standard rate). However, if any of these expenses are associated with a personal activity, then the expenses are no longer deductible. Other items that aren’t deductible include your phone bill or internet service, which you may think is ordinary and necessary expenses for gaining a new job. The IRS does not look at it that way, since it is technically not new or unique to your job search. Expenses that you incur that are reimbursed by your future employer are also not deductible.
Are job-related moving expenses deductible?
Yes, if the associated expense is ordinary and necessary. Please note that this is an “above-line deduction,” which means that you can deduct the expenses even if you claim the standard deduction on your tax return. Taxpayers can specifically deduct moving expenses associated with lodging, transportation (airfare, vehicle mileage $0.19 per mile, parking fees and tolls), and the cost to package, crate, store, insure and transport actual household goods and personal property. But, this doesn’t apply to the cost of the meals while traveling. And, if your employer puts you up in temporary housing before you move, that’s considered income to you.
Are state taxes always deductible on your federal return?
Yes, if you itemize deductions on your return. Please note that in prior years, taxpayers could either deduct state income taxes or state and local sales taxes. While this is not an option currently for 2012, we believe Congress will reach a compromise and offer this option again for the 2012 tax year.
What’s the maximum amount of charitable contributions I can deduct?
Generally, your deduction cannot exceed 50% of your adjusted gross income (AGI) for the year and 30% of your AGI if you donate appreciated property. If you donate more than these amounts, it can be carried forward for up to five years. Please note that if you donate a vehicle, the deduction is limited to the price paid for the vehicle when it is sold by the charity to raise cash. The only exception is if the charity uses it for their own purposes, in which you’d be able to deduct the full fair market value at the time of the donation.
Can you deduct donations of your time?
Unfortunately, the answer is no. Volunteer work and time given to a charitable organization is not deductible in any instance. However, you can deduct the cost of any materials you donate and 14 cents per mile for work related to volunteering.
More tax questions? Browse answers or ask tax deduction questions online.
Related Articles
->Year End Flexible Spending Account Advice
->The Zero Percent Capital Gains Tax May Apply To You
->Tax Planning Strategies to Mitigate Your Risk for Higher Taxes in 2013
->The IRS Is Also Concerned About The Alternative Minimum Tax Patch
->Commuters Can Now Deduct 55.5 Cents Per Mile
