10 Tax Deductions You Don’t Want To Forget
Tax season has officially begun and let’s not kid ourselves: taxes are complicated and not the most fun thing to do. However, when we try to take a shortcut when it comes to taxes, we often shortchange ourselves out of deductions we could have taken. Taking a little extra time to research and learn about which deductions you qualify for could help you save thousands of dollars on your tax bill. Doesn’t that seem like a quality use of your time?
Here are 10 tax deductions you don’t want to forget. Make sure to read through to discover the tax credit that 25 percent of eligible taxpayers fail to claim!
1. State Sales Tax
If you live in a state with an income tax, you can either choose to take the deduction or itemize your state taxes. However, don’t forget to check to see if itemizing your state taxes may be more beneficial for you, especially if you purchased something large like a boat, car or airplane. Check out the IRS sales tax calculator to figure out your correct deduction.
2. Reinvested Dividends
Don’t pay more than you have to on reinvested dividends! Most investors usually automatically reinvest their dividends. Those reinvested dividends in turn increase your tax basis in your fund and as a result decrease the amount of taxable profit.
Make sure to use a calculator to figure out your true cost basis (the amount of gain or loss when you sell an asset) so that you’re not paying more than you have to on your investments.
3. Charitable Expenses
When calculating big charitable donations to deduct on your taxes, don’t forget to count the small things too! You can deduct products used to make your charitable donation. Donated a homemade casserole to the local food shelter? Make sure to keep the receipt for your ingredients so that you can count them off. Also, you can deduct 14 cents per mile driven for charitable means.
4. Student Loan Interest Paid By Parents
Most students (and graduates) know that the interest paid on their student loans is tax deductible. However, did you know that the student loan interest paid by your parents on your student loans is deductible as well? You can claim up to $2,500 on student loan interest paid by your parents as long as you’re not a dependent.
5. Moving Expenses To Take A New Or Relocated Job
While you can’t deduct expenses looking for a job, you can deduct expenses on your taxes for moving for your new job or a relocated job for the same employer.
The new job must be a significant distance from your current home: at least 50 miles farther than your previous commute. Check out the other standards set by the IRS here.
6. Child And Dependent Care Tax Credit
While most taxpayers know about the child tax credit, some miss the child and dependent care tax credit if they pay their child’s expenses through a reimbursement account at work. As of the latest 2017 tax plan, you can claim up to $5,000 in expenses.
7. Earned Income Tax Credit
Did you know that 25 percent of taxpayers who are eligible for this credit fail to claim it? This tax credit is meant to supplement wages for low-to-moderate income workers and ranges from $510 to $6,318 for 2017.
8. State Tax You Paid Last Spring
Don’t forget to include owed 2016 state taxes on your 2017 state tax return. If you owned state taxes for 2016 and paid that debt in 2017, make sure to include that as one of your itemized deductions.
9. Jury Duty Wages Paid to Employer
If you have an employer that pays full-time wages while you’re on jury duty, you may have to pass on those wages from jury duty on to your employer. Make sure you don’t pay taxes on this income that simply passed through your hands. Deduct jury duty paid to your employer on your taxes.
10. Salary You Pay to Your Kids
Here’s yet another commonly overlooked tax deduction or credit related to your kids. If your kids help you with your business and you pay them a fair salary for their efforts, you can deduct those expenses from your business revenue.
While many of these deductions and credits may not add up to much, why miss out on money? Also, if you qualify for two or three of these deductions or credits, the savings may add up to something great!