If you feel like every time you file taxes, the numbers are getting bigger and bigger, it might be time to make sure that you are taking advantage of all of the potential opportunities for savings that are available in tax breaks, credits, and deductions. Free online tax calculators are great for this. Here are some oft-overlooked deductions and credits that, when added up, could save you a good bit of money:
- Education deductions come in all shapes and sizes. Not only are you eligible to deduct expenses from costs such as textbooks and equipment fees and tuition, you may be able to get a credit based on educational savings accounts. In addition, if you have paid off a student loan on behalf of your child, your child is actually able to claim that loan payment as a deduction as long as the child is not filed as a dependent.
- If you do have dependent children, you may have a large variety of credits and deductions available to you including deductions based on contributions to educational and other savings funds, deductions on costs of childcare, breaks based on head of household or number of dependents, etc. You can also claim deductions based on medical care, especially if it is not covered by your employer. However, if you are not filing jointly with a spouse or ex-spouse, only one of you will be able to file for most of these claims, usually the parent paying for the majority cost of child rearing.
- If you do any kind of charitable work or charitable giving, you can save a lot of money on taxes. Donations up to $100K are not taxed, so you can deduct these donations from your taxable income. If you foster children or if you foster animals, you can also claim deductions for the expenses accrued from support and care. And if you travel for charity, for example if you drive your car around to help with a Meals on Wheels program, you can deduct those travel expenses from your taxes.
- You can deduct many expenses related to moving if you are moving for a job. However, certain qualifications need to be met in order for you to qualify. For example, you must be employed by the new company or have an offer of employment before and after you move. The new location must also represent a significant burden if you had to commute from your current home. This usually means that it must be fifty miles farther from you home than your current place of employment (so fifty miles plus your current commute distance, not net fifty miles). You won’t qualify if you move to a new location to start looking for work.
- You can take many deductions to support your business or to support your job hunt. Examples include clothing, office supplies, office cleaning (which can include home cleaning if you work from home), gas and travel expenses, professional journals, professional training and classes, hardware and software purchases, etc. However, you will need to be able to provide a thorough paper trail in case of audit to prove that all of these expenses really went to support your work or your job hunt.
- You can give money to support your children or grandchildren. While for most people, the lifetime limit of parent donations to their kids or grandkids ($15.2 million) will be a cap that they’re not likely to exceed, if you are concerned about this cap, you can make tuition and medical payments directly to the school or service provider to avoid having to pay inheritance tax on payments that exceed this amount.
- You can deduct expenses related to many of your own medical costs. For example, birth control if purchases with a prescription can qualify as a deduction.
Of course, if you really feel like your tax numbers are getting too high for you to handle, you should be sure to look for professional help through a service like Community Tax IRS tax relief. If your tax debt has really gotten large, then it won’t make sense to try to make up the cost through deductions. Instead, there could be a bigger foundational problem going on with the way you file your taxes, so you need to make sure that you file in the way that suits your income and lifestyle.