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Don’t Miss These Important Tax Deductions

I’m no tax expert, nor do I want to be, but as my taxes get more complicated, I do want to make sure I don’t give more of my money to Uncle Sam than I legally owe. Here are some tax tips that may be especially helpful to the under-30 set.

Student Loan Interest – If you have student loans and an adjusted gross income of less than $65,000, you can deduct the interest you paid – up to $2,500. This deduction is counted as an income adjustment, and is available even if you do not itemize your deductions. Your student loan lenders should mail you a statement of your total annual interest paid, or it will be printed on the first loan statement of the new year.

Moving Expenses – If your job (or a new one) required you to move more than 50 miles, you can deduct certain moving expenses as an adjustment to your income. This deduction is a key example of why receipt organization comes in handy for everybody, even if you don’t itemize your deductions. Need to get your receipts in order? Check out Shoeboxed, the mail-in receipt scanning service.

Gambling Losses – Did you have a lucky trip to Vegas last year? If so, the IRS is going to demand its cut, if they haven’t taken it already. You can reduce your tax liability on gambling winnings, however, by claiming gambling losses as a deduction. There is a catch. You can only deduct losses up to the amount of the winnings you reported and paid taxes on. Lost your shirt last year? Sorry, you still owe taxes on all the money you blew.

State Taxes –This one is pretty hard to miss, but don’t forget to deduct your state income taxes. Live in a state that doesn’t have income tax? You can deduct state sales tax instead. Another great reason to keep those receipts organized!

College Tuition – Are you in school, even part time? You might be able to deduct up to $4,000 you paid in college tuition you paid for yourself, your spouse or a dependent – even if you do not itemize.

Charitable Contributions – While you probably won’t overlook any checks you cut to charity last year, did you know that other expenses for charitable causes – even if they are not direct donations – are deductible? This can include mileage driving to volunteer, the ingredients for something you baked for a fundraiser, or supplies you purchased to advertise a charitable event.

Do you have any favorite deductions? I’d love to hear them!

Published or updated on February 25, 2008

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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