Every taxpayer needs to ensure they get all the credits and deductions that they qualify for, as this is the only way to legally reduce your tax bill. Uncle Sam does not care if you forgot a deduction, so don’t expect a reminder or a check in the mail that corresponds to such credit or deduction.
As a result, this article will explore some of the most frequently forgotten tax credits and deductions that taxpayers should note:
Local and State Sales-tax Deduction
While many taxpayers will have to give up their local and state income taxes, people who live in states that don't have income taxes like Alaska, Texas and others can benefit from writing off their local and state taxes.
Even when you live in states that charge income tax, you might have to take the sales tax deduction, assuming they paid extra in local and state sales taxes compared to state and local income taxes due to a huge purchase.
Tax breaks related to Education
Taxpayers who were enrolled in college classes the previous year can write off some money in tuition, books, and other expenses even if they are not working towards a degree.
This deduction, however, is not available for people taking the (AOTC) American Opportunity Tax Credit. The AOTC provides a break valued at $2500, which helps working-class people during the first four years in education.
Costs Related to Job Search
Unknown to many people, most expenses related to job searches like preparing and distributing resumes, getting to job interview venues, and other fees for outsourcing firms, etc can be deducted. However, this break is available for people who want to stay in the same field. People changing jobs or who have been out of an appointment for a while do not qualify.
Moving Expenses
If you moved the previous year for work, you might qualify to write off your transportation cost, cost of storage and other associated expenses, which is not necessary by itemization.
Such break, however, does not apply to any expense that the taxpayer’s employer covered or reimbursed. Also, such a job must be at least 50 miles away from your old home compared to the previous position. It is also essential for the employee to work full time in their first year in their fresh house.
Contributions to Charity that are Non Cash
It is not only the value of your monthly check that you wrote to your church or charitable organization that you can deduct. The value of whatever item you donated, like furniture or clothing materials, can work for you when it is tax time.
As long as you have a detailed record of inventory of all donated items and you got an acknowledgement in the form of a receipt from the receiving organization. However, it is essential to note that the value of any donated item will be less than the market value.
Mortgage-Interest Deduction
Taxpayers who own a house should bear in mind that they can deduct the mortgage fees called points paid to secure a lower interest rate after purchasing or refinancing a home. You can deduct such costs at once when you buy the house. However, should a homeowner refinance, one can only deduct the points gradually each year over the loan's life.
Gambling Losses
Uncle Sam also allows losses you incurred while gambling to be written off with other itemized deductions. Such deductions can only be deducted to the extent corresponding to the gambling winnings that can be taxed.
Whatever loss that is above your winnings cannot be deducted, based on Uncle Sam's rule. Also, anyone interested in claiming this break should have a record of their losses and wins alongside other documentation like tickets, receipts and whatever can reveal the amount that was lost or won.
FOR MORE INFORMATION ON HOW KAREN MUNOZ, EA. CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
