It is officially tax season, and although there is a lot of talk right now about tax reform, those changes are for next year’s taxes. For right now, what you should do is find all the credits and deductions available to you to reduce this year’s taxes!
While many people do claim common deductions, such as home mortgage interest and self-employment expenses, there are additional tax deductions, credits, and strategies that can lessen your final tax bill or increase your refund. Everything helps when money is tight.
Let’s start with credits that can reduce the amount you owe in taxes!
1. Child and Dependent Care Credit
You can claim a credit of up to $2,100 for daycare for your dependents so you and your spouse can work. Qualifying dependents include children under 13 and parents who are no longer able to care for themselves.
2. Earned Income Tax Credit
Don’t miss out on a credit that is worth up to $6,318 this year! Unfortunately, nearly one in five people who qualify fail to claim the Earned Income Tax Credit (EITC). Just because you didn’t qualify last year doesn’t mean you won’t this year, one-third of the EITC-eligible population changes each year based on age, marital, parental, and financial status.
3. Saver’s Credit or the Retirement Savings Contributions Credit
Make sure you “pay yourself first.” Even $20 each pay cycle can make a difference come retirement time. If your company offers a retirement savings plan, like a 401k, make sure you participate. If your income is less than $60K, you can receive a credit of up to $1,000 for a contribution of up to $2,000 into an IRA or an employer-provided retirement account, such as a 401(k). The credit is in addition to any deduction or exclusion from income for the contribution.
Some of the top tax deductions that allow you to reduce your taxable income include:
1. Moving Expenses
If you moved for a job that is at least 50 miles away from your home and held this job for at least 39 weeks, you can claim your moving expenses even if you don’t itemize deductions.
2. Tax-Preparation Fees
Tax laws change and so do your life circumstances. Using a professional to help you prepare your return may be a wise investment. The Tax Pros at Jackson Hewitt will get you every deduction and credit you deserve and the biggest refund possible. Plus, the cost of preparing your taxes can be claimed if you itemize your deductions and one missed credit or deduction could cover the cost of having your taxes done by a pro.
3. New Moms
Good news for moms! Breast pumps and lactation supplies are considered medical equipment, which means a possible deduction.
4. Career Corner
Job hunting means investing both time and money. Fortunately, you may be able to deduct some of the job-search expenses you incur in your current field. Costs such as preparing resumes, creating and maintaining websites, business cards, agency fees, and travel expenses may be eligible.
5. Wedding Bells
If you got married in a church or at a historical site this year, you may be able to deduct fees paid to the venue as a charitable donation.
6. Fitness Aficionado
While toning and fitness workouts to improve general health are considered personal expenses, you may be able to deduct your gym membership as a medical expense. If a doctor diagnoses you with a specific medical condition (such as obesity or hypertension), or a specific physical or mental illness, and prescribes workouts at a gym or participation in a weight-loss program to treat your illness, the membership dues may be tax-deductible.
7. Road Warriors
If you are traveling on business and expenses, which can add up quickly, aren’t reimbursed by your employer, you can tag on those costs as deductions.
You might qualify for at least one overlooked credit or deduction – and maybe more than one. These often-overlooked tax breaks could potentially save you hundreds – maybe even thousands – of dollars. Consult your Tax Pro and discuss how you can maximize your refund.