Tax Preparation and Appraisals
Even though it's hard to see it at 11:38 on the night of April 15, there is a silver lining to filing taxes: You can deduct all expenses related to the preparing and filing of taxes! Sort of... Tax preparation deductions fall under "miscellaneous itemized deductions" that are subject to the 2-percent limit. That means you can only deduct tax preparation expenses and fees that exceed 2 percent of your adjusted gross income [source: IRS]. Fine, it's more of a bronze lining.
Deductible expenses and fees include your accountant's fee, any software you purchased to help you prepare your taxes (Web-based services like TurboTax count), and even "how-to" books about taxes [source: IRS]. If we charged you for reading this article, you could deduct that, too.
Another deduction that falls under the 2-percent limit has to do with appraisals. If you are donating a particularly expensive item to a charity or tax-exempt institution, the IRS requires a professional appraisal to determine its fair market value. You can't include the cost of the appraisal as a charitable contribution, but you can deduct the appraisal fee as a miscellaneous itemized deduction [source: IRS]. The same is true for property that is damaged in a storm. The IRS requires an appraisal to assess the extent of the "casualty loss" for tax purposes. Again, the appraisal fee is deductible.
Author's Note: 10 Creative (But Legal) Tax Deductions
As I write this article, I'm e-mailing back and forth with my accountant about home office deductions, local wage taxes, and other baffling tax issues that make you question the existence of a just God. I am well aware that income tax revenue is used to do all sorts of awesome things like educate children and repair bridges and educate children on how to repair bridges, but does it really have to be my tax revenue? Can't they just tax the mean people? Is there no loophole for quirkiness? Apparently not. The bright side is that researching and writing about creative tax deductions has given me hope that next year I can game the system in my favor. Do you think I can convince the IRS that my three children are service animals?
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Many Americans don't think about their tax bills until the new year. But there are things you need to do before Dec. 31 if you want to pay less later.