With tax season just around the corner, now is the time to begin gathering your tax information. Whether you prepare your own taxes by hand or use computer programs, utilizing these commonly missed deductions and credits will help you get a bigger tax refund this year.
Education Tax Deductions/Credits
Did you take any classes last year? You might be able to deduct any tuition or fees that were not reimbursed by your employer or paid for by financial aid. Qualifying expenses will be shown on the 1098-T from the institution you attended.
Job Hunting
If you were unemployed last year, many of the expenses you incurred while searching for work can be deducted. For example, mileage driven, postage paid, and long distance phone calls can all be deducted, but make sure you keep good records.
Relocation and Moving Expenses
If you moved last year for your business or job, you may deduct most of the expenses of the move that were not reimbursed by an employer. The cost of travel (excluding food)and mileage can be deducted for employment moves 50 or more miles away.
Clean Fuel Credit
Did you buy a new hybrid car in the last year? In order to take this credit, you must be the original owner of the vehicle and the credit must be taken the year the automobile was purchased. Check the lists below to see if the car you purchased qualifies for this valuable credit.
Charitable Donation Deduction
Most people know of the charitable donation deduction, but did you know you can deduct for non-cash donations as well? There are certain rules for depreciating non-cash donations, but never the less you may still make deductions for giving away your old clothes or that old used car. Although you cannot deduct for time spent volunteering, you may deduct for any mileage and other expenses incurred for volunteering.
And of course, don’t forget to deduct all of your donations to qualified charitable organizations (verify that the organization has 501(c)(3) status) and/or religious organizations.
Retirement Contribution Deductions
One of the best ways to decrease your tax liability is to make retirement contributions. By contributing to your own retirement plan, you are able to take a deduction on your contributions without having to spend money. 401(k) and SIMPLE retirement plans are the most popular, and if you work for a large company you are probably already aware of your companies plan. But don’t worry if you are self employed, you can still setup your own retirement plan, such as a Simplified Employee Pension (SEP) plan which is tax deductible as well.
Home Mortgage Interest Deduction
The home mortgage interest deduction and/or credit is one of the biggest advantages of owning a home. You must itemize your deductions, but it is well worth it since you are able to deduct all of the interest paid on your home. You may also deduct interest paid on home equity loans and real estate taxes paid.
Medical and Dental Deductions
Medical expenses such as transportation, hospitalization and supplemental insurance, and other out of pocket expenses (hearing aids, eyeglasses, dentures) can be deducted. But no, cosmetic surgery cannot be deducted, unless it was needed to correct a deformity or treat an illness.
Comment from Ron
February 9, 7:10 pm
Good article, there are so many other tax deductions that people do not take. What a shame!