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3 overlooked tax deductions

By Paula Pant · Bankrate.com
Friday, February 28, 2014
Posted: 6 am ET

Last week, Bankrate writer Kemberley Washington noted that overlooking tax deductions is one of the most common and costly tax errors.

This week, I'd like to develop that point a little further by highlighting three little-known tax deductions that can save you money.

1. State and local sales tax

You pay sales tax when you buy things. The tax differs from place to place, but you might pay it when you buy a pair of pants, a television or a bag of dog food. If you itemize your 2013 taxes, that sales tax is deductible.

But here's the catch: You can deduct either your state and local income tax, or your state and local sales tax, but not both. Talk to your tax preparer or accountant to determine which of the two deductions will put more money in your pocket.

If you live in a state that doesn't charge income tax, this decision is a no-brainer -- take the sales tax deduction.

2. Moving expenses

Did you move more than 50 miles to pursue a new job? If so, you may be eligible to deduct the costs associated with your move.

If you drove to your new location, you can deduct 24 cents per mile. If you needed a storage facility, you can deduct 30 days of that expense. And if you needed lodging during your transit, you can write off that cost, too.

Here are my two favorite provisions of this piece of tax code: First, this deduction is available to people who claim the standard deduction. In other words, you don't need to itemize to take advantage of it.

Second, you don't need to be a traditional W-2 employee to take the deduction. Self-employed people who move due to work-related reasons also are eligible.

3. Same-sex marriage benefits

Last summer, the Supreme Court struck down the Defense of Marriage Act. In August 2013, the Internal Revenue Service responded by issuing a statement saying same-sex couples can file taxes jointly if they legally married in a jurisdiction that recognized the marriage.

This means that if you're in a same-sex marriage, you now can claim all of the tax benefits available to married couples, such as personal and dependency exemptions, and IRA retirement contributions.

These benefits are restricted to those who are legally married and do not apply to couples who are in a civil union.

Paula Pant helps people ditch the cubicle and live on their own terms. She's traveled to 30 countries, owns six rental property units and hasn't had an employer since 2008. Her blog, Afford Anything, is the gathering point for a tribe that refuses to say, "I can't afford it." Follow Paula on Twitter: @AffordAnything.

 

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