You are not a better American if you pay extra taxes. Most people do pay a lot more than they have to. While this article will not share proprietary tax deductions, these reminders might help you keep more in your pocket.
Here are eight tax breaks often overlooked by taxpayers, which could save you money. Some are for those who itemize only, others any filer can claim.
1. Many medical costs
It is often difficult for taxpayers to reach the 10 percent of adjusted gross income threshold(7.5 percent for seniors 65 or older) required before you can claim any medical expenses. But adding in miscellaneous medical costs might make it easier. Some miscellaneous costs include travel expenses to and from medical treatments, insurance premiums you pay for from already-taxed income, and even alcohol or drug-abuse treatment programs. Read the list of deductible medical expenses.
2. Charitable Giving
You can’t deduct the value of your time spent volunteering, but if you buy supplies for a group, the cost of that material is deductible. Similarly, if you wear a uniform in doing your good deeds, for example as a hospital volunteer or youth group leader, the costs of that apparel and any cleaning bills also can be counted as charitable donations.
Also deductible is use of your vehicle for charitable purposes, such as delivering meals to the homebound in your community or taking the Scout troop on an outing. The IRS will let you deduct that travel at 14 cents per mile.
3. Job hunting costs
While college students can’t deduct the costs of hunting for that new job across the country, already-employed workers can. Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies, are deductible as long as you itemize. The one downside here is that these costs, along with other miscellaneous itemized expenses, must exceed two percent of your adjusted gross income before they produce any tax savings. But the phone calls, employment agency fees and resume printing costs might be enough to get you over that income threshold.
Child, and more, care credit
Millions of parents claim the Child and Dependent Care Credit each year to help cover the costs of after-school day care. However, you shouldn’t overlook claiming the tax credit for childcare costs during the summer. This tax break also applies to summer day camp costs. The key here is that the camp is a day-only getaway that supervises the child while the parents work. You cannot claim overnight camp costs.
If you have an adult dependent who needs care so that you can work, those expenses can be claimed under this tax credit.
5. Moving expenses
Most taxpayers know they can write off many moving expenses when they relocate to take another job. But what about your first job? Yes, the IRS allows this write-off then, too. A recent college graduate who gets a first job at a distance from where he or she has been living is eligible for this tax break.
6. Mortgage refinancing points
When you buy a house, you are entitled to deduct the points paid on the loan on your tax return for the year of purchase. But if you refinance your home loan, you might be able to deduct points incurred when you refinance your home too, as long as you use refinanced mortgage proceeds to improve your principal residence.
7. Educational expenses
The Internal Revenue Code offers many tax-saving options for individuals who want to further their educations. The tuition and fees deduction can help you take up to $4,000 off your taxable income and is available without having to itemize.
The Lifetime Learning Credit could provide some students (or their parents) up to a $2,000 credit.
Don’t forget the American Opportunity tax credit, which offers a dollar-for-dollar tax break of up to $2,500. This new education tax break was created as part of the 2009 stimulus package as a short-term replacement for the Hope tax credit and subsequently was extended through tax year 2012.
Some of these tax breaks can save some filers a nice chunk of tax money. With others, the savings might be relatively small. But when it comes to taxes, every bit of savings helps. So make sure you don’t overlook any of these possible tax breaks as you finish up your 2015 return.