Tax season is here and it's time to getorganized and prepared for the grueling task offiling your taxes. It's important to be aware of all the deductions and tax credits available to you, so you don't miss out on valuable savings and a bigger IRStax refund. Here are some commonly missed incometax deductions that you should be taking advantage of so that you can potentiallysave hundreds or thousands of dollarson your state or federaltax return.
1. Sales and Income TaxMany filers forget to include state sales and income taxes paid asdeductions. If you live in a state that doesn't impose an income tax, tallyingup all the tax you've paid on personal and household items can really addup in savings.On the other hand, if your state does have a state income tax, it's usually a better strategy to claim that as a deduction on your tax forms for more savings unless you made some big-ticket purchases such as a car or boat.
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2. Medical ExpensesMost tax payers are able to deduct some healthcare costs and medical expenses. For example, payments for doctors, hospital stays, prescriptions and other medical costs can be deducted but only if they exceed 7.5 percent of your adjusted gross income (AGI). Keep in mind that the only expenses that are deductible are the ones not reimbursed by your insurance or some other way.
3. Charitable DonationsOut-of-pocket charitable contributions are often overlooked, especially if they were in the form of many small donations rather than a few large ones. If you've covered the cost of postage, baked cookies for fundraisers, donated clothes to a charity or given rides to the clients of nonprofit organizations, save your receipts for tax-preparation time. If they total more than $250, you can deduct the amount if you have documentation from your favorite nonprofit. If you provided rides or did other significant driving for a charity, you can claim 14 cents per mile as well.
4. ChildCareIf you're a working parent and your kids spend part of the day with a sitter or in child care, claim those expenses as atax credit. If you have child care reimbursement through your place of work, you can easily overlook the additional costs you incur beyond the $5,000 or $6,000 allocated by these accounts.Don't miss out on these significant savings; save the receipts for any sitters and after-school care.
5. Student Loan InterestIf your children are older and in college, don't forget to deduct the interest you've paid on theirstudentloansthroughout the year, if applicable. Alternatively, if you're still paying your own student loan debt, you can deduct the interest you've paid for the year using tax form 1098-E. You should receive this form directly from your lender.
6. Job Search and Moving ExpensesJob loss and career changearen't always a bad thing. If you were looking for a job last year and had to travel for interviews, you candeduct those job search costsup to 2 percent of your AGI. But only if you're looking in your same field and this isn't your first job.
If you are a first-time job seeker, however, you can claim your moving expenses if the new job is more than 50 miles from your old place of residence. You can claim the cost of moving your belongings to the new place and driving your vehicle there as well as parking and toll fees, given your employer does not reimburse you.
7. Mortgage Interest and RemodelingIf you're a homeowner, your luck continues. If you remodeled your existing home, deduct state sales tax for building materials if you're itemizing. If you bought your house, be sure to claim the interest paid on your mortgage points. If you've refinanced, you have to distribute the points of interest over the life of the new mortgage, as well.
8. Energy-Saving Home ImprovementsIf you've made your home more energy efficient, there are tax deductions for that, too. You can receive a 10 percent deduction on costs up to $500, as well as 30 percent off the cost of certain major upgrades through 2016. This is known as the Residential Energy Efficient Property Credit. The credit covers 30 percent of theinstallation including labor costs of qualified residential alternative energy equipment, like solar hot water heaters, wind turbines and geothermal heat pumps.9. Military TravelIf you are a member of the National Guard or are a military reservist, part of your travel expenses for attending meetings or drills more than 100 miles from home and overnight stays are deductible, even if you don't itemize. As you file taxes, you can write off all of your lodging cost and half your meal expenses and the 2 percentAGI limit does not apply.
10. Self-EmploymentAfter years ofwidespread job loss, many Americans opted for self-employment but this freedom does come at a price. Workers not only have to buy their own health insurance, but also pay a hefty self-employment tax.Make sure to deduct the cost of health insurance premiums you pay for yourself and your family, which reduces your self-employment tax.Additional 2016 tax deductions for the self-employed include contributions to a Simplified Employee Pension (SEP) IRA, which are made pre-tax, as well as the cost of business meals, ongoing education or training and business use of your home.
Always keep your receipts and documentation, so that when it comes time to file yourfederal taxes and statetaxes, you're prepared. Not only should you have what you need, you should also be sure not to miss out on the deductions you deserve.
Bob Lotich from SeedTime.com (formerly ChristianPF.com), apersonal finance blog, contributed to the reporting for this article.
This article originally appeared on GoBankingRates.com.
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