Australia, Loopholes, and Taxes oh my
Loopholes, as far as I'm concerned, are like little puzzles that most commonly pertain to legality, permission, and finance. I love them...always have.
In high school I had perfect attendance my senior year, but had an opportunity to go to Australia for 2 weeks. Perfect attendance was important because, if maintained, would get me out of certain exams (slow clap for our education system?). I found a loophole that would allow me to both take the trip and maintain my attendance record. I met with the principal to see if it would fly with him, and to my excitement it did!
So, why do I tell you this? Because it's TAX SEASON BABY! Woohoo! Get pumped! No really, I'm actually excited. I love finding ways to decrease my tax base and have shared a few of them below to get you started (unfortunately, not all of these apply to me for 2017). Also, this is a longer post than normal, but I think it's worthwhile (totally biased).
Before we get started, it's important to note that the Standard Deduction for 2017 taxes is $6,350 for single and married filing separate filers while the standard is $12,700 for married joint filers. In 2018, this will approximately double and you will want to stay on top of that. Based on your filing status, it may not be wise to itemize (my rap game is strong) if you will not exceed the standard deduction.
1. For those that are self-employed, I could give you a list of over 20 potential deductions. One of my favorites is office rent and/or deducting the room in your home in which you work from. Work-related driving mileage, travel expenses (outside of the city you live in), and health/dental/long term care insurance premiums are all items to explore (among others).
2. Charitable contributions....because who doesn't love giving money away right? No seriously, make sure to keep track of this. I use the Its Deductible app for this specifically. Note - you cannot deduct the $100 gift you gave to your nephew for college graduation. He needs the money more than you know, but the IRS doesn't care because they are cold-hearte........an organization that only recognizes gifts to non-profits etc. Also, get your giving receipts people!
3. Expenses related to a job search - sayyy whaaat?! I know, pretty cool. You will need to have lots of supporting documentation for this one, but miles, tolls, flights, and employment agency fees can really add up.
4. If you had to withdraw your money early from a retirement account (not suggested), certificate of deposit, or similar account the penalty you paid could qualify as a tax deduction. This remains true even if you don't itemize deductions on your 1040. This can end up being a huge tax savings for some!
5. For you new home owners, make sure to remember that your mortgage interest payments are an available deduction. If you bought a house in 2017, make sure you only deduct what you actually paid in 2017 and not some annualized number - just lookin' out!
Bonus: For you small-time Airbnb-ers, did you know you can rent your primary residence for up to 14 days in a calendar year and pay zero taxes on that income? Pretty gnarly!
Note: I am not a tax professional - you should consult one. Some of the information in this post could apply differently to you, so do your own research prior to filing. I freaking love my CPA (she's amazing, and may have the best laugh known to humankind), so if you find yourself in need email firstname.lastname@example.org to connect. For those of you who want even more deduction ideas, this article written by Barri Segal is quite extensive.