Your Money, Your Future
Your Money, Your Future

What? The friend crashing on my couch may be tax deductible?!

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Federal officials Thursday say they’ll soon be releasing online tools to help people deal with the tax-filing issues related to Obamacare.
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It goes without saying that no one wants to overpay on their taxes. But it's hard to keep track of all the deductions and credits that could lower that tab — particularly those that are less predictable but still perfectly legal.

For example, if you've lost big in Las Vegas or let a friend crash on your couch, you may be able to factor that in for Uncle Sam.

For those who want to think outside-the-box, here are some of the more unusual tax deductions and credits that could decrease your tax bill or increase the tax refund come April.

— By CNBC.com's Jessica Dickler
Posted 7 March 2017

Letting a friend crash on the couch

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If your down-on-their-luck pal has been sleeping on your sofa for the past year and earned less than $4,050 while you've been mostly supporting them, then you may be able to claim them as a dependent and deduct up to $4,050 on your federal return, even though you are not related.

Consider it a small token of appreciation for all of your hospitality.

On the flip side, children supporting elderly parents can also use this deduction, even if they don't live together.

Putting in a swimming pool

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Pools are not just for cannonball competitions. If you have a serious health issue like obesity, heart disease or diabetes, and your doctor recommends swimming as a vital form of daily exercise, you may be able to deduct the cost of a new swimming pool in the backyard as a medical expense as per your doctor's orders, according to Lisa Greene-Lewis, a CPA and tax expert at TurboTax.

Sending your kids to summer camp

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Speaking of summer, all that bug juice and capture the flag can also pay off. Working parents can save more than $2,000 on their taxes just because they sent their kids to summer day camp, Greene-Lewis said.

Thanks to the Child and Dependent Care Credit, you may receive a credit up to $1,050 of your expenses for one child under 13 and up to $2,100 for two or more children under 13.

The same goes for mini camps or day-care programs over winter break if you are working. But overnight camps, despite being a rite of passage for some, do not count.

Cleaning out your closet

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Most people organize their closets as part of their spring cleaning overhaul every year, but few think of the tax-saving opportunities.

Donating clothing, books, toys, furniture and kitchen goods all count toward your charitable contribution as far as the IRS is concerned. "That stuff adds up," said Kathy Pickering, executive director of the H&R Block Tax Institute.

In order to get the deduction come April, keep a receipt, a note of the organization's name, and the date and fair market value of all noncash goods, Pickering said.

For donations of $250 or more, you must have a written acknowledgment of the contribution that states you received nothing in exchange; for donations over $500, you must also attach Form 8283 to your return, she said.

Losing big in Las Vegas

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When it comes to gambling, more people lose big than win big. In fact, collectively, over $142 billion was lost in 2014 alone, according to a report by blackjack.org, based on the most recent tax stats tables available from the IRS.

You can ease some of the pain of a losing streak by offsetting the tax on gambling winnings, said Pickering.

Since you do have to report your gambling winnings and will be taxed on the windfall, don't forget to include your losses to reduce the total liability, she said.

Of course, you can only offset winnings, not claim losses beyond that point. "You don't get to claim more than what you won," Pickering said.

Paying interest on student loans

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For the 43 million Americans paying off some amount of student loan debt — this one's for you. Each year, you can deduct up to $2,500 of student loan interest, provided you have paid that much, according to Greene-Lewis.

The Student Loan Interest Deduction is not for every student borrower; the amount of the deduction gradually decreases and phases out completely once your income reaches a certain level.

Taking classes

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Did you brush up on a second language, graphic design or even social networking? Anyone who took an enrichment course to boost their job prospects can claim the Lifetime Learning Credit on their federal income-tax return.

It applies to tuition, enrollment fees and any required books or supplies for just about any post-secondary course.

"The rule of thumb is that it has to be at an eligible institution and to improve your job skills," according to Pickering.

The credit is 20 percent of the first $10,000 of eligible expenses to a maximum of $2,000, but also phases out once your income reaches a certain level.

Searching for a job

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Hiring a career coach, traveling to job interviews in faraway locations and fees to a job placement agency are costly. But any expenses related to job hunting can be deducted if they exceed 2 percent of your adjusted gross income, which is likely if you are unemployed and on the hunt for your next career opportunity.

Just keep in mind that a spiffy new interview suit or shoes won't count, said Greene-Lewis.

And if you get hired, congratulations! You can deduct 23 cents per mile of the cost of getting yourself and your stuff (even your pet) to the new job location, as long as it's more than 50 miles away, according to Intuit.

Driving to OfficeMax

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Most people don't think much about all the time they spend in their car driving to sales calls, meetings or even OfficeMax, but those work-related miles add up.

Not counting the commute, drivers can deduct those trips at the federal rate of 54 cents per mile for 2016.

Approximately 60 million Americans use their cars for work-related trips, but 50 percent of them are not capturing that deduction, according to a survey by the mile-tracking app MileIQ.

The hard part is keeping track of it, noted Chuck Dietrich, MileIQ's co-founder and CEO. "The reason people don't do it is because recording all of this information is no small effort," he said. "They never realize how much money they are leaving on the table."

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