The IRS reports numerous slip ups taxpayers commit yearly while filing their returns and on top of the list is usually the failure of most taxpayers to fill in their Social Security number or making errors on entry. However, this may not be the gravest of all the blunders as millions are lost yearly due to the failure of different taxpayers not noticing and claiming various tax write-offs that can make up huge savings. Below is a list of the commonly overlooked tax breaks that you can take advantage of.
- Job searching expenditures
Have you been moving from one office to another looking for work last year? Of course you have incurred costs looking for a job in the same life of profession. If this is the case, then you can itemize these expenses and deduct them as assorted costs, if they surpass 2% of your Adjusted Gross Income. Such costs include: cab fares, employment agency levies, resume printing, as well as food, transport and lodging in search of jobs.
- Credit for Home Buyers
Those who qualify and purchased residences before May 1, 2010 may claim up to $8,000 for long term homeowners who possessed a residence for at least five years of the eight years before buying a new one. Taxpayers with attuned gross incomes between $125,000 and $145,000 for single persons and between $225,000 and $245,000 for married couples who jointly file their returns.
- State Sales Taxes
Citizens of income-tax states see the tax as a larger burden than the sales tax hence prefer the income tax write-off. The IRS has tables that indicate the amount residents of various states can deduct based on their states, income and local sales tax rates. There is a calculator on the IRS website to aide taxpayers in figuring this out.
- Dividends that are Reinvested
This is usually missed by majority of taxpayers but it is a subtraction that can help a taxpayer save a lot of money. By using the dividends to purchase more shares, an investor’s tax basis increases in the fund. Failure to take account of the reinvested dividends may result in their double taxation.
- Credit for Child-Care
You can claim as much as between 20% and 35% of what is paid for child care while working. Only the expenses of children below the age of 13 are considered. Despite the fact that only $5,000 can be paid via a tax preferred repayment account, 2 or more kids can benefit from up to $6,000 of the credit.
- Student-Loan Paid by Parents
The IRS handles student loans repaid by parents as money given to the kid, who then repays the loan. Up to $2,500 of student-loan interest paid by parents to a child who is not claimed as a dependent can be written off, the kid doesn’t have to itemize to use this deduction.
- Baggage Levies
Airlines have become notorious for imposing charges on baggage and travel plans changes. Such charges should be added to the deductible travel expenses.
- Extra Bonus Drop
Qualified assets placed in service in 2011 can be written off by business owners. This break only applies to new assets with 20 years or less of recovery period like computers, machinery and farm equipments.
- Energy Saving Home Improvements Credits
This is worth 10% of the cost of qualifying energy savers encompassing new windows and insulation. The limit of this credit is $500 overall from 2006 to 2011. Homeowners who set up credible substitute energy equipment like solar hot water heater, geothermal heat pumps, and wind turbines have no dollar limit.
- Self-Employed Medicare Premiums Deductions
Individuals who keep running their own companies after meeting the criteria for Medicare can take away the premiums they shell out for Medicare Part B and Medicare Part D and the price tag of supplemental Medicare policies.
- Job Relocation Costs
If you are forced to move over 50 miles from your current residence to a new home due to a job offer, then you can deduct the costs of moving the household goods to the new residence.
- Demutualized Stock Sale
Did you sell stock in 2011 that you received in demutualization? Then you can claim a foundation to lower your tax tab.
- Travel Expenses for Military Reservists
Travel costs to drills or meetings by the members of the National Guard or military reserve can be deducted. You must have travelled over 100 miles from home and be away overnight. The costs cover lodging, half the cost of food, and mileage allowance for driving one’s own car.
- The Opportunity Credit
This is obtainable for up to $2,500 of college tuition and connected expenses paid during the year. Folks with a bespoken Adjusted Gross Income of $80,000 or less can claim full credit.
- Income of a Decedent Estate Tax
You can get income-tax write offs for the value of the estate tax paid on the IRA assets you received
- Jury Fees
The IRS demands that jury fees incurred during jury duty be reported as taxable income. The amount refunded to the employer is deductible.
- Spring State Tax Remunerated
If you filed a previous year’s state income tax return the following spring, you should include the amount in your state-tax write-off on the following year’s tax returns alongside state income taxes suspended from your paychecks or paid via quarterly probable expenditure.
- Points from Refinancing
You can subtract the points paid to acquire your mortgage at a go. You however, have to deduct the points on a new loan over the life of that loan if you refinance.
These tax breaks can enable a serious taxpayer save a lot of money if claimed.