Determining what expenses to deduct on a tax return can be difficult. For starters, it may make more sense to use the standard deduction than to itemize. For the 2017 tax year, the standard deduction is $6,350 for a single filer, $12,700 for married couples filing jointly, and $9,350 for someone filing as head of household (all slightly higher for the blind and elderly). Many purchases or activities may technically be deductible, but if the total doesn't exceed the standard deduction, it's likely better to take the simpler route.
For taxpayers who are itemizing, some potential deductions can be confusing. When is tuition deductible? What about moving costs? Here's a look at 12 expenses or activities that may be deductible, and ways to lower the burden when they're not. Bear in mind, too, that some of these deductions are disappearing next year under the Tax Cuts and Jobs Act.
The costs of commuting to and from work, whether by car or public transportation, are not deductible. Parking costs at a daily workplace aren't deductible either. But the costs of traveling to meet with clients or potential customers, going from one job to another, or traveling outside a normal working area are currently deductible -- if they exceed 2 percent of the worker's adjusted gross income and are not reimbursed by an employer. Take either a flat 53.5 cents-per-mile deduction or calculate the actual cost by adding up the cost of fuel, depreciation, repairs, maintenance, and insurance associated with each trip. Next year, things will be different under the new tax law enacted in December 2017.
Looking for a new job may bring expenses to prepare or make copies of a résumé, hire an employment agency, or travel to interviews. These expenses are deductible, even when the activity does not result in getting a job. Claim this deduction this year if you qualify. Next year, it goes away under the new tax law.
Pets may be loved members of a family and can offer many perks, but they are not dependents -- and expenses associated with caring for them can't be deducted. One exception: guide or service animals. In that case, the costs to buy, train, and care for a pet (including food, grooming, and vet visits) are deductible. Pet owners might also be able to deduct the costs associated with caring for a foster pet on behalf of a nonprofit shelter or rescue agency.
Most homeowners can deduct property taxes and mortgage interest payments on their primary (and, with limits, a second) home. Depending on income, private mortgage insurance payments may be deductible as well. However, homeowners insurance premium payments and homeowners association fees are not deductible. Note, however, that these deductions won’t be the same next year.
The cost of renting a home, apartment, or condo is not deductible. An exception is for people using part of the space exclusively and regularly for business. Tax filers can determine the home office deduction based on the relative expenses and size of the business area to the entire home. (A simplified option lets the filer deduct $5 per square foot, up to 300 square feet, used for business purposes.)
The cost of summer camp is not directly deductible, put parents qualifying for a child and dependent care credit may be able to offset some of the expenses. The child must be 12 or younger and, while overnight camps do not qualify, specialized day camps (such as football or science camp) sometimes do. Among other requirements, the parent must work, or be looking for work, full-time.
Employees who did not get reimbursed for an expense -- perhaps a meal while traveling for work, a passport for a business trip, association dues, or work supplies -- can deduct the expenses. Only the portion that exceeds 2 percent of their adjusted gross income is deductible, though. Again, claim these while you can. They go away next year.
Medical and dental expenses may be deductible, but only the amount beyond 7.5 percent of the filer's adjusted gross income. Some examples of expenses include fees to doctors, psychologists, and nontraditional medical practitioners; prescription drug and insulin payments; pregnancy tests and breast pumps; and prescribed dentures, contacts, or glasses.
Private kindergarten and grade school tuition are not deductible. If a child attends a special school for health reasons, the tuition might be deductible as a medical expense. Higher education tuition and fees may be deductible if the student attends an eligible school -- defined as a college, university, vocational, or postsecondary institution eligible to participate in the U.S. Department of Education's student aid program (that's most accredited institutions).
Donations to qualified charities, including 501(c)(3) nonprofits and some churches, are deductible. The donation can be cash, investments, or physical goods such as clothes, a vehicle, canned goods, or furniture. But donors who receive something in exchange for their donation, such as a T-shirt or tickets to an event, must subtract the fair-market value of the benefit from their deduction. Giving time by volunteering is not tax-deductible, although taxpayers can deduct the costs associated with driving to or from a volunteer opportunity or donation. For 2017, the standard mileage rate is 14 cents a mile. Filers can also deduct the cost of paying a babysitter while volunteering.
Weddings expenses are not deductible, but newly married couples may be able to recoup some costs by donating leftover flowers, food, decorations, or even the wedding dress. The donations must go to eligible organizations such as nonprofit hospitals, churches, food banks, or secondhand stores. Brides for a Cause is a nonprofit that accepts donations of wedding dresses and bridal accessories and helps needy couples have a wedding or vow-renewal ceremony. The deductible amount is the fair market value of the donated items -- likely less than the retail cost.
Moving expenses are currently deductible, but only if the move is necessary for a new job or because of a transfer to a new location with the same employer. Moving within the same city or town may not qualify; the new work location must be at least 50 miles farther from the taxpayer's old home than the old job was. And the job has to be full-time for at least 39 weeks during the first year. (Exceptions apply to members of the Armed Forces.) Deductible expenses include moving insurance, packing supplies, professional mover fees, and travel expenses but not meals. But the deduction for moving expenses also goes bye-bye next year under the Tax Cuts and Jobs Act.