Top 5 Overlooked Tax Deductions
Follow CBSDFW.COM: Facebook | Twitter
(CBSDFW.COM) - With 70,000 pages of tax code, John Pollock, president of Financial Gravity, said it's easy to overlook potential deductions but said don't bank on the IRS to point them out if you miss them.
"You need someone that understands it, wants to do it ethically, legally and morally; and will help you find all these little things," he said.
Here's our top 5 overlooked tax deductions
1. Babysitting costs
In order to claim the up to $3000 per child credit, you must be working or doing charity work when the babysitting and daycare expenses occur. Getting a babysitter to go out on Friday night doesn't count.
2. Gambling losses
Whether you were dealt a bad hand, picked the wrong numbers, or the wrong horse; the IRS allows you to write off your gambling losses. However, it can never exceed your winnings. So if you won $500 dollars, the most you can write off is $500 in losses.
3. Weight loss programs
The key is you need your doctor to write you a prescription. The same goes for programs that help you quit smoking. Pollock said even massages can be tax write-offs as long as they are at a doctor's order.
4. Paying your kids
Pollock said there are major tax benefits to hiring your own under-age children as bona-fide employees if you own a small business. For starters, as long as your child doesn't earn more than $6,100 they won't owe any federal employment or income tax. Plus if you put them on the payroll, you can use that as a deduction. Pollock said while you need to have your own business, he said his clients are often surprised to discover they are business owners.
"If you have a separate house or separate real estate that you rent, that's a business for example," he said. "So a lot of people have businesses that they don't realize they have business."
5. Free beer
If you are a small business owner and you offer your customers a free drink to improve business, the courts have ruled you can write off a free cold one as a tax deduction.
"These are part of the code that's allowed," said Pollock.
(©2016 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
