ANDY'S CONSUMER TIP OF THE DAY: most overlooked tax deductions

ANDY'S CONSUMER TIP OF THE DAY: most overlooked tax deductions

MEMPHIS, TN (WMC) - Personal finance and business source Kiplinger has listed what it calls the 23 most overlooked tax deductions. Here are the top 10:

* STATE SALES TAXES. This is a big one especially in Tennessee, where there's no income tax. You don't have to save all of your purchase receipts, either. The IRS provides a calculator to estimate your annual sales tax deduction.

* REINVESTED DIVIDENDS. Kiplinger reported this isn't a deduction, but a "subtraction" you, your fund manager and accountant ought to monitor:  "If, like most investors, you have mutual fund dividends automatically reinvested to buy extra shares, remember that each new purchase increases your tax basis in the fund. That, in turn, reduces the taxable capital gain (or increases the tax-saving loss) when you redeem shares. Forgetting to include reinvested dividends in your basis results in double taxation of the dividends."

* OUT-OF-POCKET CHARITABLE DEDUCTIONS. Did you prepare a dish or casserole for a non-profit? You can deduct the cost of the ingredients. Save the receipts!

* STUDENT LOAN INTEREST PAID BY PARENTS. Kiplinger said if parents pay back a child's student loans, the IRS approaches that money as if it were given to the child, then used by the child to pay the debt. As long as the parents no longer claim the child as a dependent, the child can deduct up to $2,500 a year of parent-paid interest.

* JOB-HUNTING COSTS. Transportation, food, lodging, cab fare, printing costs -- all deductible!

* MOVING EXPENSES. The IRS's publication on deductible moving expenses is here.

* MILITARY RESERVIST TRAVEL EXPENSES.

* MEDICARE PREMIUMS FOR SELF-EMPLOYED.

* CHILD-CARE CREDIT. This deduction's between 20 and 35 percent of what you pay for child care while you work.

* ESTATE TAX ON INCOME FROM A DECEDENT. If you inherited a retirement account from a deceased loved one, you qualify for a deduction of the amount of estate tax paid on the assets.

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