Overlooked Tax Deductions
When tax season arrives, it’s easy to get caught up in the urgency of just getting taxes done, without considering some of the ways to save extra cash. There are currently around 200 different tax breaks within the U.S. tax code that can offer filers extra assistance.
Here are five of those oft-forgotten deductions and credits:
1. Costs of job hunting1
For anyone on the job hunt, it’s important to keep track of all job-hunting expenses, as some of them can probably be deducted. There are a few stipulations for deducting job search expenses (found here), but most importantly, to remain eligible the job hunter must look for work in their current field of employment.
2. Child care costs2
Not technically a deduction, this is actually a credit for child care, which can be even better — while deductions are worth a quarter on the dollar for the 25 percent tax bracket, credits are worth a dollar on every dollar. In some cases, employers offer a child care reimbursement account, but even if this isn’t an option, all employed parents are eligible for a credit worth between 20 percent and 35 percent of child care costs.
While charitable contributions can also lead to deductions, donating items to “qualified organizations” is an easy way to collect deductions up to a certain amount. Assuming the items to be donated are in good shape, individuals are eligible for a deduction based on the current value of the item in question. The amount to be deducted for each item must be tracked by the individual making the donations, and prices can be found in the Salvation Army’s donation value guide.
4. More schooling3
For individuals earning less than $63,000 a year ($127,000 total for couples) who want to beef up their skill set with extra education, there’s the Lifetime Learning Credit offered by the IRS. For eligible parties, the credit will match up to 20 percent of education spending up to $10,000, even for retirees.
5. Investments for retirement4
While deductions for qualified plans like IRAs or 401(k)s are common knowledge, there is an extra tax credit for investing that many eligible Americans don’t even know about called the Saver’s Credit. It can provide a tax credit of up to $1,000 to eligible individuals, and $2,000 to eligible married couples.
1IRS.gov. (Jul 18, 2012). Job search expenses can be tax deductible. Retrieved from http://www.irs.gov/uac/Job-Search-Expenses-Can-be-Tax-Deductible
2McCormally, K. (Feb 10, 2014). The most-overlooked tax deductions. Retrieved from http://www.kiplinger.com/article/taxes/T054-C000-S001-the-most-overlooked-tax-deductions.html
3Hills, J. (Feb 26, 2014). 10 surprising tax deductions. Retrieved from http://bargainbabe.com/10-surprising-tax-deductions/
4Yoder, S. (n.d.). 12 tax breaks you’ve never heard of. Retrieved from http://money.msn.com/taxes/12-tax-breaks-youve-never-heard-of
The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.