Tax season is one of the most dreaded times of the year for most people. To forego the added expense of hiring someone to prepare their taxes for them, people often opt to do their taxes themselves, which can lead to numerous errors, like forgetting to include their Social Security number. One common mistake that is costing people money in their pocket is missing potential tax deductions. Here's a little cheat sheet of the 7 most overlooked tax deductions to help you for the upcoming tax season. As far as forgetting to input your Social Security number, you're on your own on that one.
Most people remember to include their checks and payroll deductions when calculating their potential tax deductions from charitable contributions for the year. However, many often overlook the fact that they can write off certain costs accrued while doing charitable work. Even if your only donation for the year was the time spent working at a soup kitchen, there are certain things you can write off like travel expenses to the soup kitchen site and expenses accrued, like buying supplies, food and ingredients, for your charitable work. Just don't try to write off the time spent volunteering by putting a value to your charitable work.
2. Eco-Friendly Tax Credits
Did you know that your concern for the environment can be rewarded in the form of potential tax credits? Switching home appliances with Energy Star products, improving your home's insulation and installing qualified roofing products that help reflect the sun's rays can earn you tax credits. The next time you're looking to improve your home or upgrade your kitchen appliances, make sure you check out EnergyStar.gov for more information about earning tax credits for energy efficiency.
3. Homeowner Tax Deductions and Credit
Home-buyer tax credit can be a huge tax break, but for first-time home buyers, it can be overlooked. First-time home buyers who purchase a home within the United States, and long-time residents who have been living in the same home for a certain time period can qualify for home-buyer tax credit. Certain restrictions, like if the purchase price of the home is over $800,000, can make you ineligible for this tax credit. Be sure to check IRS.gov to see if you qualify for this credit for the upcoming period.
4. Costs for Looking for a Job
For those suffering the unfortunate event of losing a job, there are potential tax breaks that can be taken advantage of during the hunt for a new employer. Unfortunately, those looking for their first job do not qualify, but those who are searching for a position to do the same type of work from their previous job can deduct certain job-hunting costs. These costs include:
- Travel fees if a potential job is away from home.
- Food and lodging if you are forced to be away from home.
- Fees for signing up with an employment agency.
- Money spent advertising yourself to potential employers such as expenses for making resumes, business cards and postage spent.
5. Moving Expenses for a First Job
Those looking for their first job do not qualify for tax deductions related to looking for a job, but they do have the opportunity for a potential tax break if they find a job away from home. If your first job is at least 50 miles away from your current residence, you can deduct the cost of relocating to a new home for your first job. Deductions include travel expenses and the cost of moving household items to your new residence.
6. Health Insurance Deductions
While one of the disadvantages of business owners and the self-employed is missing out on health benefits that many company workers enjoy, they have the opportunity to deduct the cost of health insurance for themselves and their families. In other words, they can create their own health benefits with this tax deduction. If you were unaware of this potential tax deduction, make sure you speak to a tax professional to get more information about how you can write-off money spent on health insurance premiums.
7. Self-Employment Tax Deductions
Many people who have lost their jobs have made a career shift, taking them down the path of the self-employed. For those unfamiliar with being their own boss, certain self-employment tax deductions can be easily overlooked. One example of an additional tax deduction that tends to be overlooked is using a portion of the home exclusively for business. If this portion of the home is regularly used for business purposes, you can deduct a portion of the rent, real estate taxes, utilities, repairs, insurance and mortgage interest.
If you were unaware of these potential tax deductions and credits, be sure to consult a tax professional to see how you can maximize your tax deductions and credits for the upcoming tax period. Also be sure to visit IRS.gov for more information about these tax deductions and credits, as certain rules and restrictions apply, and can change from year-to-year.