The U.S. Internal Revenue Code is complex, and it outlines broad categories of losses and expenses for which taxpayers may claim a deduction or a credit. This has resulted in some quite unusual tax breaks. Although most tax breaks are not so surprising, you may be losing money by overlooking an obscure tax break.
You are required to be paid for jury duty, but many employers continue to pay full salaries while their employees serve on juries. In many cases, the employer requires the employee to hand over his jury duty pay in return for his full salary during his absence. Since you are required to report your jury pay on Form 1040, the tax code allows you to deduct any amounts you turned over to your employer.
Home Improvement Expenses
If you install certain energy-efficient improvements, such as geothermal heat pumps, you can claim a deduction depending on the product and whether you have taken the deduction before. If you refinance your home to pay for the improvements, you may be eligible to deduct the interest you pay on the loan. This deduction includes prepaid interest and the interest portion of installment payments.
If you attend a post-secondary institution, you may be eligible to claim the Lifetime Learning Credit. As of 2012, the Lifetime Learning Credit is worth more than an equivalent tax deduction because your credit amount is subtracted from your total tax due, not from your taxable income. If you are taking classes to improve your job skills, you don't even have to be enrolled in a degree-seeking program to claim the credit. Furthermore, you don't have to be a full-time student; you can claim the credit even if you are taking only one class.
If you do volunteer work, you can't claim a tax break for the value of your time or services. However, if the organization you volunteer for qualifies under Section 501(c)(3) of the Internal Revenue Code, you can claim out-of-pocket expenses you incur while working. Although such expenses typically include items such as mileage expenses, the Tax Court has approved babysitting fees as a deduction for a taxpayer who couldn't have performed volunteer work without a babysitter to watch her child.
Smoking Cessation Aids
The IRS allows you to deduct qualified medical expenses if they exceed 7.5 percent of your adjusted gross income. These expenses can include smoking cessation programs and anti-smoking medication and acupuncture, if recommended by a doctor -- wellness programs you might not normally associate with a tax deduction.
Video of the Day
- people at work image by Greg Pickens from Fotolia.com