Consumers must be careful of what's deducted

Americans are always on the lookout for things they can claim that will end up reducing their tax liabilities, but the ways in which they may try to do so might not always be the most beneficial, and might even lead to trouble down the road. Therefore, it's often wise for consumers to brush up on what they can and cannot claim as deductions so that they avoid running afoul of the Internal Revenue Service.

One of the things that may lead to significant issues in this regard is people trying to get deductions which have expired since the last time they were claimed by those people, according to a report from New Orleans television station KSHB. For example, Americans could once write off the sales tax they paid when buying a new car, but that deduction is no longer valid. Likewise, they cannot claim the Kelley Blue Book value of cars they have donated to charity, and a number of tax breaks that existed for consumers who tried to make their homes more energy efficient have expired as well. Therefore, if a consumer is thinking about trying to claim any of these, it might be wise to look into whether they actually exist today. Simply assuming they do can lead to major problems and much larger tax bills down the road.

An even bigger misstep
Another mistake people often make is claiming things which are in fact not allowable deductions at all, the report said. Often, these are the result of very common misconceptions that can be based in reality; for instance, consumers are able to deduct the points they pay at closing when they buy a new home, and as a result many who refinance their existing mortgages may think the same tax break applies to them. However, this is not the case. In addition, because certain types of things related to traveling for business are deductible, many consumers fall into the trap of thinking this is also true of their expenses for simply driving to work, but that's not the case.

Of course, consulting with a tax professional will help consumers to better understand all the deductions for which they may be able to qualify, and that, in turn, will help them avoid complications down the road that can arise from improperly filed documents.

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