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tax tips
Don’t Overpay Your Taxes
Commonly overlooked
credits and deductions
With tax season in full swing, take time
to consider how to get the most out of
your tax return, which includes fi nding
all the credits and deductions available to
you. While many taxpayers claim common
deductions, such as home mortgage
interest and self-employment expenses,
there are additional tax deductions that
can lessen your fi nal tax bill or increase
your refund. Th ese oft en-overlooked tax
breaks could potentially save you hundreds
- maybe even thousands - of dollars
if you itemize deductions.
To start, get to know the diff erence
between tax credits and tax deductions.
Tax credits reduce the amount
you owe in taxes. In some circumstances,
tax credits allow a refundable credit,
meaning you may not only reduce
the amount you owe to $0, but you can
also get money back. Deductions, on the
other hand, simply reduce your taxable
income. Both can have a potentially signifi
cant impact on your taxes and are
oft en worth the extra eff ort to include on
your return.
Some commonly overlooked credits
include:
1. Child and Dependent
Care Credit
You can claim a credit of up to $2,100
for day care 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
Th e Earned Income Tax Credit (EITC)
is a federal tax credit based on your
income and the number of qualifying children
living with you. Nearly 1 in 5 people
who qualify fail to claim the credit, worth
up to $6,318. 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 marital,
parental and fi nancial status.
3. Saver’s Credit or the
Retirement Savings
Contributions Credit
Make sure you “pay yourself fi rst.” Even
if it is only $20 each pay cycle, make sure
you are putting some money into a retirement
fund. If your company off ers a
retirement savings plan, like a 401(k), it is
usually in your best interest to participate.
If your income is lower than $60,000, 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). Th e credit is in
addition to any deduction or exclusion
from income for the contribution.
Some 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
Plan for tax time. Tax laws change and
so do life circumstances. Using a professional
to help you fi le your return may be
a wise investment. For example, the tax
pros at Jackson Hewitt can help you get
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.
In fact, one missed credit or deduction
could more than cover the cost of having
your taxes prepared by a tax professional.
3. New Moms
Breast pumps and lactation supplies are
considered medical equipment, which
means they qualify for a possible deduction.
4. Career Corner
Job hunting oft en means investing
both time and money. However, you
Photo courtesy of Getty Images
may be able to deduct some of the
job-search expenses you incur. Costs
such as preparing resumes, creating and
maintaining websites, business cards,
agency fees and travel expenses may be
eligible.
5. Wedding Bells
If you were married in a church or at
a historical site during the past year, you
may be able to deduct fees paid to the
venue as a charitable donation.
6. Medical Fitness
While general 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 or participation in a weightloss
program to treat your illness, the
membership dues may be tax-deductible.
7. Road Warriors
If you travel for business and aren’t
reimbursed by your employer, those costs
can qualify as a deduction.
Every possible tax credit and deduction
can help when money is tight. You might
qualify for at least one overlooked credit
or deduction - and maybe more than one.
Consult a tax professional to discuss how
you can maximize your refund and learn
more at JacksonHewitt.com.
Courtesy Family Features