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
- 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
- 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
- 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
- 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
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.