The Most Overlooked Tax Deductions… Get the Tax Money You Deserve!
Each year Americans overpay on their taxes by an estimated $945 million. This money is mostly returned each year in the form of a refund check, but you may still be overpaying if you aren’t maximizing your refund. There are hundreds of tax breaks and discounts available. Try checking your tax return paperwork for these commonly missed tax deductions and enjoy another $100 or more on your refund total.
1. Earned Income Credit
This tax break is designed to help Americans that are only earning low wages due to underemployment. Many single adults and married couples skip this credit because they wrongly assume that you must have children to use it. The EIC is available to anyone that earns under $13,440 per year and is over 25 years in age.
2. State Sales Tax
If you live in a state that doesn’t collect income taxes, reporting the sales tax you have paid over the last year could increase your refund substantially. The IRS records your local sales tax, so you just need to claim it when filing to receive a quick and easy boost to your total refund.
3. Energy Efficiency Credits
The credits for energy efficiency improvements to your home have fallen over the past few years, but homeowners can still claim up to 10% of the total amount spent in the year. Adding insulation and new windows could give you up to $500 back.
4. Education Credits
The American Opportunity Credit is the single most valuable education credit, giving everyone attending college a $2,500 deduction immediately. You can also take a $4,000 credit against any tuition paid out of pocket, but you can’t take both credits during the same year.
5. Healthcare Costs
Your healthcare costs must exceed 7.5 percent of your income, but many people are now paying at least that much out of pocket each year. Deduct anything you spend on elective or necessary procedures by maintaining good records of your spending through the year.
6. Home Office Deductions
If you complete work at home at least part of the week, consider setting up a dedicated home office for a bigger tax refund. You can claim the mortgage, utilities and upkeep costs on the percentage of your home that the office uses.
Even $5 tossed in a collection bucket for a charity counts as a donation towards your taxes if you collect a receipt. Donating items instead of throwing them out is a great way to boost your refund and do a good deed at the same time.
8. Travel Expenses
Self-employed taxpayers can deduct their gas and car maintenance costs, but you can also deduct travel expenses that result from charity work and volunteering. This is especially
important if you ever fly across the country or overseas to participate in a charity event.
9. Joint Vs. Separate Filing
Most married couples file a joint return each year because they assume that it’s the only option. If you and your spouse have a disparity in income, filing separately could save you hundreds of dollars. Try asking your tax preparer to calculate the differences before choosing a filing status based on a guess.
10. Random Expenses
There are a variety of extra miscellaneous expenses that can increase your refund or lower your tax payment if they exceed 2% of your total adjusted gross income. These expenses include expenses incurred during the job hunt, uniforms for work, dues for any unions or professional organizations you join, and fees spent on tax advice and preparation.
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We’ve done our best to come up with forgotten tax deductions… are there any other IRS deductions you would you add to this list, please comment below?