Every tax payer wants to save money by paying as little to the Internal Revenue Service as possible. In order to achieve this, you must take advantage of every tax deduction, credit, or income adjustment that is available to you. Unfortunately, many of these simple tax breaks are missed by taxpayers. This list details 10 tax breaks that are easily overlooked and may save you money.
1. Additional charitable gifts
While you may already be aware that monetary gifts to charities can be counted, the expenses you incur while doing charitable work can also be counted on your tax return. You can’t deduct the value of your time spent volunteering but you can count the cost of materials for supplies purchased. Moreover, any the cost of the uniform you wear doing your charitable service and any cleaning bills can also be deducted.
So if you volunteer for a community group like the Boy Scouts or Girl scouts you can deduct the use of your vehicle, the cost of your uniform, and any supplies you purchase for your group.
2. Moving Expenses for a new job
Many tax payers take advantage of deductions for moving expenses when relocating for another job, but these deductions can also be taken for recent college graduates who get their first job away from where they have been living.
3. Job searching costs
If you are already employed and looking for a new job then you can deduct the costs associated with the job search, including resume preparation and employment agency fees. The job search must be for a job in the same occupation and the costs must exceed 2 percent of your adjusted gross income before they produce any tax savings. Unfortunately, this tax break doesn’t help college students hunting for a new job.
4. Military reservist’ travel expenses
Members of the military reserve force and the National Guard can deduct related training expenses if they travel more 100 miles and stay overnight for training exercises. These expenses include the cost of lodging and half the cost of meals. Be sure to track your miles if you drive to training because you can also deduct your mileage along with any parking or toll fees.
5. Child and dependent care
While millions of parents claim the child and dependent care credit each year many neglect to claim tax credit for summer child care, including summer day camp costs. This credit also applies to adult dependents who need care during the day while you work.
6. Mortgage refinance points
You may already know that when you buy a house you can deduct the points paid on the loan on your tax return for that year of purchase. However, you may not know that if you refinance your home loan you may be able to deduct those points too, as long as you use the refinance mortgage proceeds to improve your principal residence.
7. Medical costs
If you itemize your deductions you may have discovered the difficulty in reaching the 7.5 percent of adjusted gross income threshold needed before claiming any medical expenses. However, you might have an easier time clearing this threshold if you include miscellaneous medical costs like travel expenses to and from medical treatments and insurance premiums you pay from an already-taxed income. Adding these additional medical expenses will prove even more useful this year because a new provision raises the threshold to 10 percent of your adjusted gross income.
8. Retirement tax savings
When you contribute to a retirement account you can get a tax credit for up to 50 percent of the first $2,000 that you contribute. This tax credit can be used for contributions to an individual retirement account or a workplace plan.
9. Educational expenses
If you are pursuing higher education you can deduct up to $4,000 of your tuition and fees associated with your education. Even better, you can do so without having to itemize and you can claim lifetime learning the credit for your dependents. The American opportunity tax credit also offers a dollar-for-dollar tax break of up to $2,500. This tax credit was created as part of the 2009 stimulus package and was extended to 2017 as part of the American Taxpayer Relief Act of 2012, also known as the “fiscal cliff” tax bill.
10. Energy-efficient home improvements
The substantial tax breaks for energy-efficient home improvements end at the end of 2010 but you may still be able to get a tax credit of up to $500 on your 2012 and 2014 returns, thanks to the “fiscal cliff” tax bill of 2012. The downside here is that the tax credit is only a fraction of what was previously available and you must pay attention to specific spending limits. Additionally, the $500 tax credit cap applies to any taxpayer who received any previous energy tax credit since 2005.
So the next time you’re filing taxes be sure to keep these and other commonly missed tax breaks in mind so you can make the most out of your tax credits and save as much money as possible.
If you are in need of tax advice, contact seasoned tax attorney Todd Unger for a free legal consultation today!