Common Tax Deductions

All too often, people lose hundreds — if not thousands — of dollars in potential deductions because they haven't put their financial paperwork in order in the prior months. You don't have to save every piece of paper. For example, credit card and bank statements can be tossed after three years. But when the document records the amount you invested — whether in a mutual fund or a new bathroom in your house — you'll want to keep it until you unload the original investment. Why?

The reason. If you don't keep tabs on your cost basis (the amount you originally spent on the investment), you could be cheating yourself when computing the capital gains tax you owe when you sell.

The method. Use a financial software package to help you keep track of the cost basis for your investments, charitable contributions, business expenses, and the like. Or you can do it the fifth grade way: Store things by category in a three-ring binder.

Use Your Losses
If you have investment losses this year, you may want to put them to use cutting your taxes. How? By using them to offset any investment gains. You can use investment losses to offset capital gains in an unlimited amount, dollar for dollar. If you don't have capital gains to offset, you can write off a maximum $3,000 loss this year and carry forward the rest for future tax years. What if you're high on a particular investment even though it's lost money for you? You can sell it and replace it with something similar, which will enable you to take the deduction (but also preserve your portfolio strategy).

55 Safe & Legal Deductions To Save On Taxes

1. Cost of having a tax return prepared the previous year.
2. Dues to professional societies and subscriptions to professional journals.
3. Medical insurance premiums.
4. Union dues and expenses.
5. Liquidated damages to a former employer, such as for a broken contract.
6. Gambling losses. (However, winnings are taxable).
7. Money given to non-profit charities.
8. Cost of uniforms and/or special clothing required on the job.
9. Special shoes required for your job.
10. Special tools, equipment and supplies necessary for your job.
11. Credit for political contributions.
12. Credit for care of a child or dependent.
13. Earned income credit (for low income workers).
14. Energy tax credit, for making energy efficiency improvements to home.
15. Charitable gifts such as clothing, furniture, real estate, etc.
16. Doctor's, dentists, hospital bills.
17. costs of prescriptions, drugs.
18. Expenses for eyeglasses, hearing aids, dentures, contact lenses, etc.
19. Employment agency fee when looking for work.
20. Moving expenses, when necessary for business related reasons.
21. Fees for books, newsletters, seminars, etc., that give tax advice.
22. Upkeep expenses (including laundry, cleaning) for uniforms, work clothes.
23. Protective clothing such as safety shoes & glasses, hard hats, etc.
24. Appraisal fee to determine amount of loss for casualty or theft deduction.
25. Appraisal fee to determine market value of property claimed as deduction.
26. Home telephone expenses relating to your job, including long distance.
27. Customer entertainment.
28. Professional licenses.
29. Malpractice insurance (as in case of nurses, doctors, etc.)
30. Investment expenses for advice paid to banks, brokers, advisors, etc.
31. Travel expenses to consult with broker, to do investment research, etc.
32. Cost of safety deposit box rental.
33. cost of preparing, typing, printing, mailing, etc., job resumes.
34. Cost of seminars, books, classes, etc., on how to write a job resume.
35. Travel and transportation expenses necessary for finding new employment.
36. Meal and lodging costs when necessary for finding a new job.
37. Cost of education required by your employer for keeping your job.
38. Cost of education to improve skills required in performing current work.
39. Donations to churches, religious, non-profit organizations.
40. Losses caused by accidents, storms, floods, thefts, etc.
41. Elective surgery such as face-lifts, breast implants, thigh-tapering, etc.
42. Acupuncture.
43. Laetrile, in states where it is legal.
44. Psychiatric and psychological care and treatment.
45. Transportation to and from places for medical examinations, treatments, etc.
46. Sales taxes, including big-ticket times such as car, boat, etc.
47. Mortgage interest.
48. Interest on credit card and department store charges.
49. Interest on loan purchases, such as automobile.
50. Closing costs when selling home & moving, for business related reasons.
51. Capital gains and losses.
52. Personal retirement plans such as IRA and Keogh plans.
53. Personal property taxes, state and local taxes.
54. Real estate taxes.
55. Alimony.