In some circles, there is nothing more macho than outsmarting the U.S. government.
Consider this an annual, chest-bumping exercise. You haul out the U.S. tax forms or you head to your local certified public accountant (each year before April 15) and you get out that pencil and calculator. A few hours of sweat and brain-exercise later and you’ve kicked your old tax bill right through the uprights – or hit a home run if you prefer that metaphor.
Whatever the metaphor, when you run into your buds the next time around, if the conversation veers over into what your return will be for the year, the dude with the biggest refund check deserves the congratulatory knuckle-clunking or the “We are not worthy” gesture of adulatory respect.
In so many words, lowering your tax bill is like taking on the big, bad IRS and coming out ahead of the game. Now is the time to say “Boo-yah!”
But how, alas, can you possibly defeat an army of professional brainiacs? Wouldn’t you rather go a few rounds with Mike Tyson than get into a row with a battalion of scone-eating pencil geeks with thick-glasses, all of them wearing short sleeved starched white shirts? You bet you would.
But here’s how you beat them: It’s simple. You keep excellent records.
When an IRS nerd says “No way, Jose,” and you pull out a receipt backing up your claim, you have an excellent chance of watching the nerd go into quivering muscle-shakes, like a scared bunny. And all you had to do was keep good records. How much did you spend on daycare last year? How much did you pay in interest on your mortgage or to a real estate agent if you sold your house? How much did you pay for childcare? All these questions require tedious, but accurate record keeping. Add it all up and it can save you a bundle.
In point of fact, loopholes in the 74,000 page U.S. tax code are not just for business moguls. Here are some options for the average dude. Here are some you may have overlooked:
Mileage Expenses
You usually cannot deduct mileage expenses just for driving to and from work, but often companies pay mileage reimbursements for driving while on company time. Secondly, you can deduct mileage for a move when you move in order to be closer to work. You can also deduct mileage, if you are driving from one job to another job.
Everything You Pay For At Home
Your home may be your primary office or it may be your secondary office. Either way, it’s a place where you occasionally conduct business, even if it’s the stray phone call that cannot be contained by the company switchboard.
If you can use your home as a deduction, then a portion of mortgage or rent payments, heating and electric bills and even snow plowing your driveway can be considered a business expense.
If you don’t keep records, you lose. If you do, “you got ‘em.”
Medicare Premiums for Self Employed Workers
According to Kiplinger, if you continue to work for yourself after qualifying for Medicare, then you can deduct premiums “for Medicare Part B and Medicare Part D, plus the cost of supplemental Medicare (medigap) policies or the cost of a Medicare Advantage plan.”
On top of that, this loophole can be employed whether or not you itemize your expenses – “Boo-yah!”
Interest rates
Almost everyone needs a loan at one time or another, from a Max Lend quick-cash loan to a home mortgage. But here’s the tip for taxpayers: Interest paid for student loans – even for your children’s loans – are deductible, as is the interest paid on mortgages for taxpayers who file a form 1040 and itemize their expenses, so as long as it is a mortgage taken out in the taxpayer’s name.
Max Lend Loans and other quick-option lending firms are often precluded from lending to active duty military personnel, their spouses or their dependents. “If you’re an active duty member of the armed forces or are on active Guard or Reserve duty, the Military Lending Act (MLA) says that you can’t be charged an interest rate higher than 36 percent on some types of consumer loans like certain payday loans, auto title loans, and tax refund anticipation loans. It also protects your spouse and certain dependents,” says the Consumer Financial Protection Bureau Web site.
Child Care credit
This can be considered the baby-sitter loophole, but up to 35 percent of your child care payments can qualify as a tax credit. However, discuss options with your employer, because if the company you work for provides a child care reimbursement account, you might do even better.
Looking for work?
Expenses incurred while looking for work are … that’s right: Deductible. But this entails lots of record keeping. Write down your mileage on any trip that entails looking for work, plus expenses for interview clothes or services that help prepare resumes and cover letters.
Jury Duty Pay
This loop requires your company to pay you while you are on jury duty, then ask you to reimburse them your jury duty pay. If they do, your jury duty pay is deductible.
Business Trips
Of course, business expenses are deductible, but The Fiscal Times points out that cleaning expenses – such as dry cleaning – are deductible if they are incurred on a business trip.
Union Dues
Deductible – as are work gear, which includes clothing if the clothing is considered protective gear.
Education
Are you taking classes that are required by your employer? If so, they are deductible.
Theft and Misfortune
The value of anything stolen is also a deduction. So, too, are losses incurred by accident or Act of God.
Health Care
If you’re self-employed, family healthcare expenses are deductible, including expenses for any child under 27-years old as of the end of 2014.