Overlooked Tax Deductions

The wealthy often pay a low percentage of their income in taxes, because they can afford to hire the best tax experts. These experts are often knowledgeable about provisions in the tax code that allows for tax write-offs and deductions with which a lay person might be unfamiliar. If you cannot afford the services of tax experts, you can still benefit from these provisions by developing an understanding of the requirements that apply. The following are a few that are often overlooked:

SEE: Personal Income Tax Guide

Nonbusiness Bad Debts
If you make a personal nonbusiness loan and you are unable to collect the amount, you may be able to claim a deduction for the amount for the year that the debt becomes completely worthless. This does not apply to amounts that can be considered gifts instead of loans, and as such, there must be evidence that there was an understanding between you and the borrower that the amount was expected to be repaid. For instance, a written enforceable agreement, outlining the repayment terms of the loan. This provision is limited to amounts in which you have basis because it was included in your income. Other nonbusiness bad debts for which you may be eligible to claim a deduction include:

Mechanics' and Suppliers' Liens
This applies if you paid off a lien placed against your property by material suppliers because of debts owed by a builder or contractor, and you made the payment so as to avoid foreclosure and loss of your property. If you are unable to get repayment from the builder or contractor, you can take a bad debt deduction for the amount.

Insolvency of Contractor
Amounts that you paid as a deposit to a contractor which has since become insolvent are deductible if you are unable to recover your deposit.

Secondary Liability on Home Mortgage
You may be eligible to take a bad debt deduction for amounts that you paid to satisfy a mortgage, if:

  • You entered a transaction wherein someone assumes your mortgage, instead of the home being sold outright
  • you remain secondarily liable for repayment of the mortgage,
  • the buyer defaults on the loan,
  • the house is sold for less than the amount outstanding on the mortgage,
  • you paid the difference between the sale price and the outstanding mortgage amount and
  • you are unable to collect the amount you paid from the buyer.

Be sure to keep track of any future repayments that you receive for nonbusiness bad debts for which you claimed a deduction, as you may be required to include those amounts in your income.

Damages for Breach of Employment Contract
If you paid a former employer damages, because you broke an employment contract, you can deduct that payment if it is attributable to the pay you received from that employer.

Professional Dues
If you paid dues to professional organizations, for which the memberships help you to carry out your job, you may be able to deduct those amounts. This includes, chambers of commerce, bar associations, medical associations, boards of trade, business leagues, real estate boards and trade associations. To learn more, check out An Overview Of Itemized Deductions.

Depreciation of Computer Required for Work
If you own a computer that is used for the convenience of your job, and the computer is required as a condition of employment, it may be eligible for a depreciation deduction. Be careful here, as using a computer for your convenience, such as you taking home work that you would prefer not to do at the office so you can leave earlier, is not usually considered to be 'required as a condition of your employment.' In general, the computer must be necessary for you to perform your duties as an employee.

The Bottom Line
There are many other tax deductions that are often overlooked, which usually result in individuals paying more income tax than required. You can pay the least amount of tax required by doing some research on allowed deductions. A good place to start is the IRS website. Also, if you can afford it, use the services of a competent tax professional.



More From Investopedia

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Deals of the day-Mergers and acquisitions Reuters - 10 minutes ago

    (Adds Alere, Fiat Chrysler; updates Rackspace) Aug 26 (Reuters) - The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Friday: ** Cloud services provider Rackspace Hosting ... … More »

  • Dollar gains, U.S. stocks fall as Fed shakes 'complacent' markets
    Dollar gains, U.S. stocks fall as Fed shakes 'complacent' markets Reuters - 11 minutes ago

    U.S. stocks gave up early gains in choppy trading on Friday, hurt by a surging U.S. dollar as investors grappled with the possible timing of an interest rate hike after comments from several Federal Reserve officials, including Chair Janet Yellen. … More »

  • Oil prices edge up but OPEC giants downplay output limits AFP - 15 minutes ago

    Oil prices edged higher Friday but the market remained weak as OPEC's key producers cast doubt on the possibility of cutting output. Iranian Oil Minister Bijan Zanganeh on Friday said his country wanted ... … More »

  • Canada, hoping to boost profile, pledges peacekeepers to UN
    Canada, hoping to boost profile, pledges peacekeepers to UN AFP News - 18 minutes ago

    Canadian Prime Minister Justin Trudeau's government on Friday committed 600 troops and Can$450 million (US$350 million) over three years to United Nations peacekeeping operations around the world. Touted by the Liberal administration as a … More »

  • Grain lower, livestock mixed Associated Press - 27 minutes ago

    Grain futures were lower Friday on the Chicago Board of Trade. Wheat for Sept. declined 17.75 cents at $3.8350 a bushel; Sept. corn lost 7.25 cents to 3.1625 a bushel; Sept. oats was fell 3.75 cents at ... … More »

  • Canada PM Trudeau to mount charm offensive in China: officials
    Canada PM Trudeau to mount charm offensive in China: officials AFP News - 32 minutes ago

    Canadian Prime Minister Justin Trudeau will tour the Great Wall, shoot hoops with retired basketball star Yao Ming and meet with women entrepreneurs when he travels to China next week to bolster trade and diplomatic ties, his office said Friday. … More »

  • Oil steady in volatile session, down 2 percent for the week
    Oil steady in volatile session, down 2 percent for the week Reuters - 36 minutes ago

    Oil prices were largely unchanged on Friday in a volatile session, as traders reacted to comments from Fed Chair Janet Yellen and reports of missile activity in Saudi Arabia. The market was taking its cues from the movement in the dollar, which has … More »

  • Wall St. falls after Fischer, Yellen comments
    Wall St. falls after Fischer, Yellen comments Reuters - 1 hour 23 minutes ago

    U.S. stocks were lower in a choppy session on Friday, with stocks bouncing between gains and losses as investors grappled with the possible timing of a U.S. interest rate hike after comments from Federal Reserve officials, including Chair Janet … More »

  • Stocks slip into losses in the afternoon after Yellen speech
    Stocks slip into losses in the afternoon after Yellen speech Associated Press - 1 hour 29 minutes ago

    Stocks were lower on Wall Street in afternoon trading on Friday, giving up modest gains following a generally upbeat assessment of the economy from Fed Chair Janet Yellen. Phone companies and utilities, ... … More »

  • Dutch PM Mark Rutte announces third-term candidacy
    Dutch PM Mark Rutte announces third-term candidacy AFP News - 1 hour 29 minutes ago

    Prime Minister Mark Rutte announced Friday his candidacy to head the Dutch government for a third succesive term in office, as the countdown moves towards next year's parliamentary polls. "Rutte also informed his top party leadership about his … More »

  • Morales sees 'conspiracy' in Bolivia minister's murder
    Morales sees 'conspiracy' in Bolivia minister's murder AFP News - 1 hour 53 minutes ago

    Bolivian President Evo Morales said Friday there was a "political conspiracy" against his government after protesting miners allegedly kidnapped, tortured and beat to death a deputy minister who tried to negotiate with them. Defense Minister Reymi … More »

  • Yellen's case for rate hike boosts dollar; stocks surrender gains
    Yellen's case for rate hike boosts dollar; stocks surrender gains Reuters - 2 hours 21 minutes ago

    U.S. equities gave up early gains on Friday, hurt by a surging U.S. dollar after Federal Reserve Chair Janet Yellen said that the case for raising U.S. interest rates has strengthened in recent months. European stocks advanced, however, while oil … More »

  • 11 Turkish police killed in PKK suicide bombing
    11 Turkish police killed in PKK suicide bombing AFP News - 2 hours 44 minutes ago

    The outlawed Kurdistan Workers' Party (PKK) on Friday claimed a suicide truck bombing on a police building in Turkey's southeast that killed 11 officers and wounded dozens more. The blast came two days after the Turkish army launched an offensive … More »

  • Stada shareholder AOC says wants board change not break up
    Stada shareholder AOC says wants board change not break up Reuters - 2 hours 50 minutes ago

    Stada shareholder Active Ownership Capital (AOC) is looking to replace most of the German drugmaker's supervisory board on Friday but has no desire to break up the 120-year-old company, one of its founding partners said. AOC wants to replace six of … More »

  • Upbeat Yellen sees markets stir, but Dow drifts
    Upbeat Yellen sees markets stir, but Dow drifts AFP News - 3 hours ago

    European stock markets stirred Friday at the end of a tranquil week as Federal Reserve chief Janet Yellen indicated there was a case for raising US interest rates. Market watchers had been waiting for Yellen to show her hand in an address to an … More »

  • British economy escapes Brexit blow, for now
    British economy escapes Brexit blow, for now Reuters - 3 hours ago

    Britain's high streets are heaving with shoppers despite June's shock vote to leave the European Union, big companies have reported few signs of distress and some tabloid newspapers are even talking about a post-Brexit economic boom. The … More »

  • RUBBER-Tokyo futures prices after evening session Aug 26 Reuters - 3 hours ago

    Following are prices for Tokyo rubber futures at the end of the Tokyo market's evening session on Aug 2016. Contract Day Volume Evening Volume * Aug 154.1 13 153.9 3 * Sep 155.6 41 156.5 66 * Oct 151.8 ... … More »

  • TABLE-INDONESIA KPB NUSANTARA PALM OIL PRICES - Aug 26 Reuters - 3 hours ago

    Aug 26 (Reuters) - Following are Indonesian prices for crude palm oil (CPO) quoted at an auction by PT KPB Nusantara (formerly known as the state marketing centre) on Monday. Buyer Volume Price Terms (tonnes) ... … More »

  • Google hires Airbnb exec to commercialize self-driving cars Reuters - 3 hours ago

    Alphabet Inc's Google self-driving car project took a step closer to market with the hire of a top executive from Airbnb, the online vacation home rental marketplace. Shaun Stewart is joining Google as a director of the self-driving car project, … More »

  • Global Economy Weekahead - U.S. jobs data to test case for rate hike
    Global Economy Weekahead - U.S. jobs data to test case for rate hike Reuters - 3 hours ago

    U.S. jobs data top economic readouts from around the world next week as global markets begin to return to business as usual following a typically quiet August with the calm broken on Friday by comments from Federal Reserve Chair Janet Yellen. … More »

  • FTSE gains after Yellen comments, Glencore rallies
    FTSE gains after Yellen comments, Glencore rallies Reuters - 3 hours ago

    Britain's top share index rose on Friday after Federal Reserve Chair Janet Yellen indicated that a U.S. interest rate rise could come later this year, a relief for investors after last week's hawkish comments from some Fed policymakers. The blue … More »

  • Tribe trucks totem pole 4,800 miles in fossil fuels protest
    Tribe trucks totem pole 4,800 miles in fossil fuels protest Associated Press - 3 hours ago

    A Pacific Northwest tribe is traveling nearly 5,000 miles across Canada and the United States with a 22-foot-tall totem pole on a flatbed truck in a symbolic journey meant to galvanize opposition to fossil ... … More »

  • AXA prevails after U.S. trial on excessive fund fees Reuters - 3 hours ago

    U.S. District Judge Peter Sheridan in Trenton, New Jersey, said late Thursday that the investors did not show that AXA breached its fiduciary duties by keeping most fees charged for mutual fund investments and back-office duties, while remitting … More »

  • Markets Right Now: Stocks slip on Wall Street Associated Press - 3 hours ago

    The latest on developments in global financial markets (all times local): 11:55 a.m. Stocks were mostly lower on Wall Street at midday, giving up a modest gain following a generally upbeat assessment of ... … More »

  • Erdogan, Putin agree to step up aid for Syria's Aleppo
    Erdogan, Putin agree to step up aid for Syria's Aleppo AFP News - 3 hours ago

    Turkish President Recep Tayyip Erdogan and Russian counterpart Vladimir Putin on Friday agreed to step up efforts to ensure humanitarian aid reaches citizens in Syria's conflict-torn northern Aleppo province. In telephone talks "the two leaders... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.129+0.001+0.78%
    N21.SI
    1.855-0.040-2.11%
    MC0.SI
    2.84+0.02+0.71%
    C52.SI
    4.22-0.05-1.17%
    Z74.SI
    0.58-0.01-1.69%
    5TP.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.29+0.08+38.10%
    5VI.SI
    0.36+0.07+22.03%
    BPF.SI
    0.192+0.030+18.52%
    AYD.SI
    0.27+0.04+17.39%
    BLU.SI
    0.40+0.05+14.29%
    BFK.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.205-0.055-21.15%
    BTJ.SI
    0.34-0.06-15.00%
    BCD.SI
    0.39-0.06-13.33%
    AYB.SI
    0.31-0.04-11.43%
    5VP.SI
    0.24-0.02-9.43%
    BAZ.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3591+0.006+0.45%
    USDSGD=X
    1.5219-0.0048-0.31%
    EURSGD=X
    1.7850+0.0007+0.04%
    GBPSGD=X
    74.8860+0.641+0.86%
    SGDJPY=X
    5.7046-0.0236-0.41%
    SGDHKD=X
    2.9614-0.0026-0.09%
    SGDMYR=X
    9,748.8359-69.749-0.71%
    SGDIDR=X
    4.9052-0.0151-0.31%
    SGDCNY=X
    1.0274-0.0032-0.31%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,324.600.000.00%
    GCZ16.CMX
    18.61+0.13+0.68%
    SIU16.CMX
    95.80-0.71-0.73%
    ^XAU
    2.080.00+0.05%
    HGU16.CMX
    47.34+0.01+0.02%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.24+0.08
    ^FVX
    1.63+0.06
    ^TNX
    2.30+0.03
    ^TYX