Going to college and receiving your degree is not only a positive life decision, but is tax deductible as well. The American Opportunity Tax Credit can be claimed to offset, dollar for dollar, expenses paid for tuition, fees and books for an at least half-time student pursuing a first undergraduate degree at an eligible postsecondary educational institution. The maximum credit is $2,500 per student a year.
9. Become a Brew Master
If you have ever had dreams of becoming a brew master or owning your own winery and you wish to pursue it as a legitimate business you can deduct all of your reasonable and necessary business expenses; a winery or a brewery can qualify as a business even if it is something you do for enjoyment, just as long as you operate it in a businesslike fashion with the intent of making a profit.
8. The (Your Name Here) Scholarship
If you have always wanted to give back to your school and to have a direct impact on the young adults, a respectable way to do so is to create a scholarship. To be deductible, charitable contributions must be made to qualified organizations, which most colleges and universities are. The scholarship must be awarded on an objective and nondiscriminatory basis.
7. Buy a Boat and Go
What could be better than relaxing on your sailboat as you drift from paradise to paradise? Being able to claim (subject to certain limitations) expenses associated with a second home, including a boat, so long as it has sleeping, cooking and toilet facilities. So go overboard and live a dream while living within your means.
6. Get Adventurous
If you want to get in touch with nature, you can claim out-of-pocket expenses, including travel, as a charitable deduction if you incur them in the service of a legitimate tax-exempt charity. So if you go to Brazil to volunteer in the rain forest or to Colorado to clear trails, you may be able to deduct the cost of your trip.
5. Learn a Language
A Lifetime Learning tax credit worth up to $2,000 is available if you are learning a foreign language for fun. This nonrefundable credit equals 20% of the tuition and fees you pay for higher education for an eligible student—including yourself. It can be used for one or more courses for an unlimited number of years, however, the credit starts to phase out if your adjusted gross income climbs above $51,000 for a single person and $102,000 for a couple.
4. Be the Next Shakespeare
If you’re pursuing your lifelong dream of writing the next great American novel, paint a masterpiece or another creative pursuit that is really just a hobby then you can deduct your expenses if you have any associated income. You can take deductions only up to the limit of your hobby income; you cannot claim a loss.
3. Be a Sport
If the main purpose of a sports event is to benefit a qualified charity and the entire net proceeds go to the charity and volunteers perform substantially all the event’s work, then you can attend the event and it is deductable. An example of this is if your business pays $1,000 so you can golf with local prospects at a charity tournament, you can deduct the full $1,000, even though the normal deduction would be limited to the greens fees of, say, $100. So hit the green and save some green.
2. Roll the Dice
You can deduct your traveling costs if you’re in a gambling mecca only if you are on a legitimate business trip or for volunteer work—not just for fun. But if you Keep a diary of your bets and save all receipts, tickets and statements showing your losses you can deduct your gambling losses, up to the amount of your winnings.
1. Go to the Moon
Not tax deductible yet, but it should be on your bucket list regardless.
Related: Check out Lesley Carter’s Blog, Bucket List Publications, for an AWESOME collection of “travel, adventure and new experiences.”
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.