Spring Forward is Tax Time
#1 If you’re a homeowner, or renter, here are some deductions you may take:
- Mortgage interest
- Property taxes
- Some costs of buying a new home
- Some costs of selling a home
California renters who meet income and other requirements can apply for a renter’s credit(!)
Check to see if you pay property taxes as part of your lease agreement. If you do, you can deduct that portion of your rent or any property tax you pay directly. Additionally, you can deduct property losses or cost of damage of your property from fire, theft, flood or other accidents or natural disasters as long as your insurance provider does not reimburse you for the losses.
#2 Home Office Deductions
If you have a home office that is used exclusively for business, you can allocate a percentage of your rent, utilities, renter’s insurance and other expenses as a tax deduction.
The area in your rental you write off must be used only for conducting business (no claiming the kitchen or living room areas).
The deduction is calculated by taking the percentage of square footage for the office from the entire rental square footage. That percentage of the rent can then be deducted. The same formula can be applied for the costs of heating and utilities for that percentage.
If you are self employed you can write off automobile expenses. You have the choice of deducting expenses either using the standard mileage rate of 56 cents per mile for 2016, plus business tolls and parking or the actual method. Try both methods for maximizing your deduction.
#3 Start Up Costs
If you started a business in 2016, don’t forget about costs you incurred beforehand that may be deductible now. Even if it’s a side business, and you are showing a loss, you can use the loss as a write off, in addition to the expenses incurred.
#4 College Costs
If you are currently in a college program, including graduate school, you may be able to get a credit for:
- Tuition expenses & Fees
- Course-related books
- Supplies and equipment
- Nonacademic fees such as student activity fees
- Room and board
If you’ve already graduated and are paying back student loans you may be eligible for a student loan interest deduction.
#5 Job Hunting Costs
If you looked for a new job in 2016, you may be able to get an income tax deduction for your job-search related costs. Qualifying expenses are deductible even if they do not result in a new job being offered or accepted. These costs include:
- The cost of resumes and postage
- Job counseling or Employment agency fees
- Telephone charges
- Local as well as out-of-town travel for interviews, to the extent not reimbursed by prospective employer
- To be deductible, you must be looking for employment in the same trade or business which you are engaged. Job hunting expenses incurred in seeking employment for the first time are not deductible.
- Deductible expenses are claimed as miscellaneous itemized deductions. These type of expenses are deductible only to the extent that, in the aggregate, they exceed 2% of your adjusted gross income.
#6 Charitable Giving
Did you do well last year 2016? You can deduct the following types of gifts:
- Miles you travel on behalf of a charity at 14 cents per mile.
- Expenses you paid on behalf of any charity.
- Value of donated clothing and goods for the lower of cost or fair market value with proper documentation.
Again, I am not a tax professional, (I sell homes) – though could recommend a few if you’d like.
However, my intent is to provide useful content that will help you while living here in the San Francisco Bay Area. If I can assist you in the preparation to sell a home, or by a home – please call me at: 415-806-4966.