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Eight Common Tax Mistakes02.20.14

Taxes are complicated and often are done under a lot of stress. It is not uncommon to forget to claim deductions or credits you may be eligible for if you are preparing your own taxes—you might not even be aware that you qualify for them! Here is a list of some of the most commonly overlooked deductions and filing errors you should check for:

  • Child Care Expenses: Most taxpayers forget to claim the expenses they paid for childcare so they can work.  You can even claim a credit for up to $1,000 in additional expenses if you have two or more children in daycare and you use the full $5,000 in excluded benefits through a workplace dependent care benefit program. 
  • Itemized deductions: Did you itemize deductions?  Itemized deductions can reduce your taxes if the total of your allowed deductions is greater than your standard deduction.  Even if you don’t pay any mortgage interest you may be eligible total up all of your charitable contributions (monetary and the fair market value of used items); state and local income taxes or sales taxes paid, and a portion of unreimbursed business and medical expenses.  Assuming you are more likely to be audited if you itemize is a myth.  Paying larger taxes because you didn’t claim all of your deductions is a shame.
  • Education credit: Did you, or your spouse or dependent, go to college or a trade school for a few classes last year?  Even if you can’t claim the American Opportunity credit you can still claim a credit of up to $2,000 for those classes taken to improve your job or life skills or even to get a degree or certificate at a slower than half-time pace.  There is even a direct deduction for up to $4,000 of tuition and fees spent to attend school during the year.  So don’t leave money on the table by ignoring the tax benefits of going to school.
  • Home improvement credits: If you replaced your heat pump, central air conditioning unit, a hot water heater, or even insulation in your attic and walls, you may be eligible for a credit of up to $500.
  • Child tax credits: Didn’t claim child tax credit?  Yes, it isn’t uncommon for parents of children who are under 17 to forget to claim the Child Tax Credits.  These credits can reduce your taxes, and for many whose taxes are already reduced, any remaining credit after taxes are zero the remaining credit may be refunded to you.
  • Extended family dependents: Was mom, dad, or another relative living with you or supported by you during the year?  If so, you may be able to claim them as a dependent and claim their medical expenses you paid.  You might even be eligible to qualify for a credit for Senior Daycare or home health care if it is necessary for you to work.
  • IRA contributions:  This is a win-win. You can lower taxes by making an Independent Retirement Account contribution because (1.) the contribution is excludable for taxes and (2.) the contribution gives you the opportunity to claim the Saver’s credit.  Finally, you can use your refund to make your IRA contribution – another way to win – putting money away so you can live comfortably when you retire.
  • Filing status: Many taxpayers claim the wrong filing status. Filing status is one of the most confusing areas of taxes.  Are you head of household or married filing jointly or separately?  Are you single or head of household or a qualified widow?  Each different filing status has their own unique standard deduction and exemption rules as well as rules governing the tax tables.

Stop by your local Jackson Hewitt office for a Refund Recheck(SM) and your local Tax Pros will let you know if you’ve missed any valuable deductions and credits that could give you a bigger refund.