5 Most Forgotten Tax Deductions
If you’re one of the millions of people who file their taxes each year, you’re probably anxious to know about the most forgotten tax deductions that can help you save some money or even get you some money back. Many people are unaware of the many deductions that are available to them, but don’t worry. This list of the 5 most forgotten deductions can help you get through your taxes a little easier.
1. Charitable Contributions
Most people think their charitable contributions throughout the year are minimal, so they won’t help out when it comes tax time. Whether it’s a big contribution or small, they all add up and can be written off of your out-of-pocket costs. If you’ve donated clothes or furniture to a charitable organization, donated a car, or even donated food to a soup kitchen, you can use those expenses as deductions on your taxes. You can even deduct the miles driven if you have used your car for charitable reasons. The trick is to always save your receipts and keep track of all your charitable expenses.
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2. Child and Dependent Care Tax Credit
Credits turn out a lot better than deductions because those credits reduce your tax costs dollar for dollar instead of reducing the amount of taxable income like deductions do. Surprisingly though, many people are unaware that you can write off the amount of money you spend on child care expenses throughout the year. According to TurboTax, you can claim up to $5,000 in child care expenses as reimbursement credit. You can also claim an additional $1,000 to deduct from your overall taxable income. This $5,000 limit only applies if you have a reimbursement account through work, however.
3. Tuition Fees and Expenses Deduction
If you, your spouse, or any of your dependents are attending college or a secondary school, you can receive deductions through the American Opportunity Tax Credit. This allows you to deduct up to $4,000 from your taxable income for tuition, fees, supplies, and books used for college. If your child is no longer a dependent and you are paying back their student loan/s, you could deduct up to $2,500 of the student loan interest you have paid. With the rising costs of earning an education, you can use all the help you can get on your taxes.
4. Earned Income Tax Credit
According to U.S. News, twenty percent of tax filers overlook this opportunity. Whether it is because the rules of this credit can be complicated or you’re just unaware, this is a refundable tax credit of up $6,200. It is designed to help supplement lower income families, but it isn’t just for them. Even those considered “middle class” can get in on the action if you have recently lost your job, took a pay cut, or worked fewer hours. It’s hard to determine the exact credit you could get because it is based on income, family size, and marital status.
5. Moving Expenses Deduction
If you’ve moved for your job, you can more than likely use those expenses as deductions against your taxable income. There are a few rules, however. The new job must have been at least 50 miles from where you were before and you must be a full-time employee of at least 39 weeks during the year following your move. If you’re self-employed, the same 39-week rule applies and you must have a total of 78 full-time weeks in the first two years. If you qualify, you could deduct most expenses acquired from moving, such as storage, mileage, and moving trucks/movers.
If you’re like most people, tax season is difficult for you to navigate. There are many rules, limitations, credits, and deductions. This list of the 5 most forgotten tax deductions can help you make the most of your tax season and hopefully save you some money in the long-run.