Check Out These Tax Deductions You Might be Missing Out On
Save Yourself More Money
We all know that we must pay our taxes. It is just a part of life, but make sure there are not deductions or tax credits that you are entitled to but may be missing. Every year taxes are overpaid by a total of millions of dollars because people forget or aren’t aware of deductions that are theirs for the taking.
Deduct your Social Security Taxes
This benefit cannot be used if you are an employee, but if you are self-employed and paying all of the 15.3% Social Security Tax, you can deduct half of what you pay. Plus the deduction is taken on page 1 of Form 1040. This means you can deduct it even if you do not itemize deductions.
The American Opportunity Credit
This tax credit is based on 100% of the first $2,000 paid for college expenses and 25% of the next $2,000. This is good for all four years of college. If your modified adjusted gross income meets or exceeds $80,000, the benefits of this begin to be phased out.
Lifetime Learning Credit
This tax credit can be used to offset the cost of higher education, vocational school, or community college for yourself even up into retirement. The tax credits are worth up to $2,000 per year for $10,000 spent. There are income limitations. If your income is $54,000 or more, the benefit is phased out.
Out-of-Pocket Charitable Deductions
Chances are you will remember those large donations that you made to charity but did you know that you could also deduct those small expenses? These are some of the expenses that are often overlooked:
- Ingredients purchased for meals prepared for soup kitchen.
- If you drove your car for charity you can deduct mileage, parking and tolls.
- Stamps purchased for a fundraiser.
- Toys and clothing donated.
Legal Fees Paid to Secure Alimony
Alimony is taxable income, therefore you can deduct part of the attorney’s fee attributable to setting this amount or any part that is for tax advice. You do have to itemize to receive this deduction and file them under miscellaneous expenses.
Credits for Energy-Saving Home Improvements
You can receive a credit for 30% of the total cost of qualified residential energy saving equipment and the labor for installation such as:
- Solar hot water heaters
- Wind turbines
- Geothermal heat pumps
Home Office Credit
You may be able to deduct a portion of your mortgage, utilities, repairs and depreciation of your home as a business expenses if you use part of your home exclusively for conducting business.
Be sure to check with a tax specialist before taking these or any other deductions.