Income Tax Deduction Tips

Income tax takes a big bite out of your final pay; sometimes up to 40 percent or more of your income goes to taxes, depending on how much you earn and what type of income it is. This is a big deal, especially if you spend money to make the money that is being taxed, and everyone knows you have to spend money to make money today. The government does allow you to write off some of this money.

Deducting Travel Expenses

Travel expenses really add up. From plane fares to hotels and meals, you can easily spend $1,000 on a single business trip to almost anywhere in the country. You are allowed to write off all expenses associated with business travel, including hotels, meals, airline tickets and even rental cars. Simply keep all of your receipts on your trip and place them in your day planner. Then staple them together when you get home and file them away. Make sure you have written proof that the trip was for business --- a meeting brief, printed email about the meeting or notes about the meeting should do.

Writting Off Depreciation

Depreciation of assets is a big gain for your company come tax time. Turbo Tax allows you to figure out the depreciation of your assets just by typing in their cost and a few other variables. This can be used for large machines such as printers, industrial tools, trucks, cars and even your home if you use your home for a home office. You can deduct an amount of depreciation for your house if you work from home more than 50 percent of the time. The government uses a formula that includes the square footage your home office occupies and the amount of time you spend there.

Education and Other Expenses

If you are a professional, perhaps you went back to school to upgrade your skills. If that is so, you can deduct the tuition you paid in some cases, as well as any interest you pay in student loans. As a home owner you can also deduct the interest you paid on your mortgage and your taxes. These are great deductions that you can take every year and they are simple to do. Just take the amount of interest paid, which is listed on your year-end statement, and deduct it.

Mileage

Deducting the mileage you drive every day from work is complicated because you can take one of several deductions: business, travel, medical or charitable. There are different rates for each one. A tax software will help you sort this out fairly quickly, so keep track of all the miles driven for these purposes; for business, the deduction right now is 50.5 cents a mile. You can even deduct the miles you drive to your church charity function. Also, remember to take note of the clothes donated, money given to charities and other charitable acts through the year.

References

• Mileage deductions
• About the deduction
• More tax deductions