As the cost of nearly everything -- including food, fuel, and other necessities -- continues to rise faster than many Americans' paychecks, it's important to cut costs wherever possible. One of the most pain-free ways to free up some extra income is to lower your tax bill by taking advantage of some deductions you may be overlooking. Here are some specific deductions for which you might qualify, as well as how you can take advantage of these deductions even for previous tax years.
What tax deductions may be available?
There are several deductions that aren't widely publicized, and therefore may be missed by do-it-yourself preparers or novice professionals.
If you're paying an attorney to secure taxable income for you or to reduce your tax owed, you'll be able to deduct any funds paid to an attorney or law firm for this purpose. The most common situations in which this can be used are when you're fighting for alimony you're owed or if you're defending yourself from an employment lawsuit. You'll also be able to deduct funds for tax advice from an attorney related to an IRS audit.
Whether you've made an insurance claim for hail damage to your home, or to replace property missing due to burglary or other theft, you should be able to deduct any unreimbursed losses from your federal income tax return. Often, your insurance policy may max out before you're made whole, or you may have incurred other expenses during the process that were excluded from insurance coverage. This deduction also applies if you didn't make an insurance claim (whether due to a high deductible or fear of having your policy dropped). Any unreimbursed, documentable losses related to your home should be deductible from your federal income taxes.
Can you take advantage of these deductions to reduce previous tax bills?
If you've been eligible for a deduction for several years and it adds to a substantial amount, you may wish to recover these costs by filing amended tax returns for the years during which you qualified for a specific deduction. By correcting your previous tax returns, you can also correct the amount due -- which, in many cases, means you'll get a hefty refund after you've filed.
You'll want to visit a certified tax professional like Jack Landis and Company to determine whether it's worthwhile to file an amended return, as well as to ensure that you've taken any other credits for which you might be eligible.