Before you get started on your taxes – here are a few deductions you don’t want to overlook:
You have the choice to deduct sales taxes or state taxes off your federal income tax. Even if you’ve paid state taxes, the sales tax break might prove to be the better deal, especially if you’ve made a large purchase such as an engagement ring or vehicle. While you do have to itemize to take the deduction, the IRS provides a helpful table for you to use as a guide.
Health Insurance Premiums
Medical expenses can quickly add up and the IRS recognizes that. For most taxpayers, medical expenses must exceed 7.5 percent of your adjusted gross income to be deducted. However, if you’re self-employed and responsible for you own health insurance coverage, you can deduct 100 percent of your premium cost.
Tax Savings for Teachers
From colored pencils to glue, every so often teachers use their own money to purchase items needed for the classroom. The IRS allows qualified K-12 educators to deduct up to $250 for materials.
Most people know that money or goods given to charitable organizations can be deducted, but what about out-of-pocket expenses? These qualify as well. For example, if you bake cupcakes for a charity fundraiser, you are able to deduct the cost of the ingredients used to make them. Simply save the receipts or itemize the costs in case of an audit.
Paying the Babysitter
You may be able to deduct the cost of a babysitter if you are paying them to watch the kids while you are volunteering for a recognized charity. The cost is seen as a charitable contribution, if you can document that while they were performing their duties, you were volunteering.
The tax code offers a number of deductions geared toward college students, but that doesn’t mean those who already graduated don’t benefit as well. The Lifetime Learning credit can provide up to $2,000 per year, taking off 20 percent of the first $10,000 you spend for education after high school if an effort to give you new or improved job skills.
Looking for Work
Losing a job is traumatic and the cost of finding a new one can add up quickly. If you are seeking a job in the same field, itemize your deductions and if these expenses exceed 2 percent of your gross income – any expenses over that threshold can be deducted. From the mileage you put on your car driving to interviews to the cost of printing resumes, it’s expensive looking for work.
At TruStone Financial we want to ensure you are prepared when filing your taxes. Whether it’s learning about additional deductions or using TurboTax’s simplified format, your neighborhood credit union wants tax season to be quick and easy.
Editor’s note: Segments of this article were taken from turbotax.intuit.com.