Top 10 Overlooked Tax Deductions and Credits - 2017
Missed Tax Deductions and Credits
As we gear up to finish up our taxes and wait to get our tax refund, it'd pay to have a look at the most overlooked tax deductions and credits. You can save more money in taxes from Uncle Sam if you incorporate these deductions and credits in your tax filing this year. After all missed tax deductions and credits can be costly. So sit back, relax and check if any of these are in your "Oops" list!
1. Deduct your Airlines Baggage Fees
Over the last couple of years, airline companies have happily increased fees to add revenues to their coffers. Baggage fees and ticket change fees have driven most travelers weary and emptied a sizable portion of their travel dollars. The volume of passengers traveling by air is increasing every year and these fees add up to billions!
The good news is that if you are self-employed, you can add these fees to your deductible business travel expenses.
2. Tax Credit for Green your Home Improvements
If you made energy saving home improvements you can get a tax credit worth 10% of the cost of qualifying costs. Some green improvements are installing new low-E windows, insulation and likes. There is a maximum limit of $500 for this credit. This limit spans from 2006 to 2011. So if you claimed it in previous years you are out of luck this year :(.
Note: You can use a professional tax filing software to make your life easy. Turbotax is one of the best ones available in the market. To save some dollars, you can avail a turbotax coupon.
3. Residential Alternate Energy Tax Credit
Homeowners who installed qualified residential alternative energy equipments like solar electric or thermal systems, wind turbines, geothermal heat pumps can earn tax credits. This credit is up to 30% of total cost, including labor, for all qualifying alternate energy systems, installed through 2016. As of now, there is no dollar limit on this tax credit.
That is great news, so go solar. Earn tax credits and reduce your monthly bill to almost nothing! The best part is you can earn extra money by selling your extra energy to the grid :).
4. Business Owners can Deduct Depreciation of Assets
If you own a business, you can write off 100% of the cost of qualified NEW assets placed in service. These assets must have a recovery period of 20 years or less. Some examples of eligible assets are computers, machinery, land improvements and farm buildings. This is really a big tax benefit, so go for it if you qualify.
5. American Opportunity Tax Credit
If you paid for college, then you may be eligible for American Opportunity tax credit. It is available for up to $2,500 of college tuition and expenses paid during the year. This credit is for those individuals whose modified adjusted gross income (AGI) is less than equal to $80,000. Married couples filing jointly should have an AGI of $160,000 or less.
This credit is not limited to a single year, you can claim it for all four years of college. The best part which makes this credit really sweet is that if it exceeds your tax liability, you can get a refund check from IRS. Most credits can reduce your tax bill to $0 but this one can actually get you a check from IRS. Wow!
6. Out-of-Pocket Charitable Contributions can be Deducted
If you've volunteered for a charity, you can claim deductions for your out-of-pocket expenses. Suppose you prepared a meal for the homeless or purchased stamps for your charity's fund-raiser, you can write off these expenses as charitable contributions. It'd be a good idea to save the receipts just in case IRS inquires. But if your contributions are over $250, you will need a formal acknowledgement from your charity. Another oft overlooked point is that if you drove your car for charity work, you can deduct 14 cents per mile along with parking costs and tolls. So doing charity work pays, huh!
7. Deduct your Job Hunting Costs
If you've looked for a job, you can deduct your job-hunting costs as miscellaneous expenses. First job hunting costs don't qualify and you need to be looking for a position in the same line of work as your previous employment. To write off these job-searching costs, your total miscellaneous costs should exceed 2% of your AGI. Deductible job-hunting costs include food, board and transport (if you are away overnight while searching), cab fares, employment agency fees, cost of printing resumes & business cards, postage, advertising and likes.
8. Student Loan Interest Paid by Parents qualify for Deduction
If your parents pay your student loan, then IRS views the money as if it was given to the child who then pays the debt. So if you are not a dependent, you can qualify for a tax deduction up to $2,500 of student loan paid by your parents. And you don't even need to itemize to use this money saver. If you are eligible, you should get this deduction since your parents won't qualify for it as they are not liable for the debt.
9. Moving Costs for First Job Tax Deduction
You can write off your moving costs for your first job. And you don't need to do itemized tax deductions for it. Isn't that great? You qualify if your first job is at least 50 miles away from your home. If you drove during your move, you can deduct 19 cents a mile if you moved in the first half of the year. For the later half of the year, you can deduct 23.5 cents a mile. Your parking costs and tolls are also deductible.
10. Child Care Tax Credit
Credits are always welcome, since they reduce our tax bill dollar for dollar. Deductions, on the other hand, simply reduce your taxable income. If you pay for child care while you work, you can qualify for a tax credit worth between 20% and 35% of what you pay for child care. So if you have been spending for work-related child care you can deduct that expense.
Did you find a New tax deduction or credit?
Hope this list of commonly overlooked tax deductions and credits helped you. If you have more missed tax deductions or credits up your sleeve please leave a comment about them. It will help save our hard earned dollars from Uncle Sam.
Wish you happy tax filing and a fat tax refund check. Cheers!