Before you enjoy all the showers and flowers the month of April brings, it’s always best to think about taxes in advance to make sure all the receipts for expenses you paid are complete. They are necessary if you want to take advantage of the tax-deductible expenses that can greatly affect your taxes and increase your refund or lower the amount of taxes you have to pay.
Here are 10 types of deductions and credits that will help you save money. Keep them in mind when you start collecting your receipts for this tax season.
Education Expenses: Did you know that you can take advantage of the Lifetime Learning Credit of 20% of up to $10,000 of tuition and fees even if you aren’t pursuing a degree? Full-time students aren’t the only ones who are eligible to deduct their tuition, casual learners can get a tax credit too.
Camp for Your Kids: If your children are under the age of 13 and you have them enrolled to a before and after school care program, daycare, or day camp to give you the chance to work, will make you entitled to claim the Child and Dependent Care Credit. If you only bring to overnight and sleepover camps, you won’t be eligible for the credit.
Health Insurance: For self-employed individuals, a deduction for the health insurance premiums they pay for themselves and their family is allowed. Those who are not self-employed on the other can deduct their health insurance premiums paid after taxes together with their other medical expenses as long as they exceed 7.5% of their income and if the deductions are itemized.
Charitable Contributions: Don’t forget to include every small donation you make to charities as well. They may be small but they add up quickly so make sure you take advantage of them. Include the cost you paid for the ingredients of meals you regularly prepare for a qualified nonprofit organization’s soup kitchen and other related expenses. You can deduct your travel at 14 cent per mile and the parking and tolls you paid as well.
Sales and Local Tax Deduction: If you itemize your tax deductions, you are allowed to deduct either the state income tax paid or the state sales tax paid. Do you live in a state without a state income tax? Then you would normally deduct the state sales tax you paid. You just have to choose whichever gives you the biggest tax deduction.
Home Office: The home office deduction is only for those who use their home regularly and exclusively for administrative or managerial business purposes. You may also claim a home office deduction for a portion of utilities, rent, mortgage interest, depreciation, cleaning and the like depending on the square footage of your home used for your business operation.
Personal Bad Debts: Did someone borrowed money from you and ran away without paying? Don’t worry, you didn’t lose all of your money. If that person borrowed $10,000 from you, you can deduct up to $3,000 of this no-business bad debt as a short-term capital loss when you file your tax return in the year the debt becomes impossible to collect.
Points Paid on Your Home Loan: Make sure you deduct the points you paid the same year you purchased a home. Points paid to refinance a loan must be written off over the length of the loan. You can write off the remaining points if you decide to refinance again that that year.
Mileage Expenses: Do you use your vehicle for business purposes? You can deduct your mileage whether you are self-employed or an employee (54.5 cents per mile in 2018). You are also eligible to deduct the cost of traveling between job locations if you have more than one job.
Medical Costs: Taxpayers recommended by their doctors to mitigate a medical condition can also deduct the cost of exercise equipment or when buying and maintaining a spa or swimming pool as medical expenses.
If you want to know more about the above-mentioned tax deductions, consulting a tax professional won’t hurt. You can get answers from your questions as well as claim the tax deductions and credits you’re eligible for based on your entries through their expertise and save more money when tax-time arrives!
