I’m going to harbor a guess and say your tax education looked very similar to mine. It started in the fifth grade when you learned about the Boston Tea Party. Then picked back up when you started working that part-time job in high school and your parents made you watch them do your taxes. Fast forward to when you’re a real adult and count on TurboTax to show you the way.
That brief education covered the basics and gets the job done, but I’m guessing that (also like me) you wish you knew how to do your taxes in the most advantageous way possible. I dug deep and found ten tax breaks and benefits that you may not be taking advantage of. Let’s work on getting you an impressive tax return this year — so you can spend more time at that yoga studio you love with the heated floors and really fluffy towels.
Health insurance premiums can get pretty pricey. That’s why when tax season rolls around you should be checking to see which medical and dental care expenses for you, your spouse, or your dependents can be deducted. Doctor office visits, prescription drugs, medical supplies, and treatment programs are potentially deductible up to an amount of 7.5 percent of your adjusted gross income.
We all know teachers go above and beyond, so much so that they often buy classroom supplies out of pocket. If you’re an eligible educator, you can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators) of unreimbursed expenses such as books, supplies, and computer equipment. We can’t forget our gym teachers! They qualify too, and can deduct health and athletic supplies.
You probably already knew you could write off charitable donations, but did you know you can deduct the costs of volunteering as well? Supplies needed while working for a charitable organization (like baking supplies for a bake sale fundraiser) qualify too. You are also allowed to deduct the cost of a babysitter if you’re paying her to watch your kids while you volunteer to work at a recognized charity for no pay.
Another deduction you may have utilized in your college days was an education credit or deduction. But guess what? The fun doesn’t stop after college! The Lifetime Learning credit can provide up to $2,000 per year, taking off 20 percent of the first $10,000 you spend for education after high school in order to further your education. Those with high-income levels may not qualify, but there are no age limits to receive this deduction.
If you’re self-employed, you’ll have to pay 15.3 percent of your income for social security and Medicare taxes. This means you’re paying the portions ordinarily paid by both employee and employer. To take the sting out of that cost, you’re allowed to deduct the 7.65 percent employer portion off your income taxes.
If you have to pay for childcare for dependents under the age of 13 while you work or search for employment, then you’ll have access to a child care credit (up to 35 percent of qualifying expenses, depending on adjusted gross income). The credit may also apply to the cost of caring for a spouse or dependent of any age if they are incapable (physically or mentally) of self-care.
This credit is for eligible contributions toward retirement plans (401(k), qualified investment retirement accounts, etc.). You’re eligible for this credit if you’re 18 years or older, are not a full-time student, and are not claimed as a dependent on another person’s return. The credits can go as high as $2,000 if filing jointly.
Any jury duty pay you receive has to be reported as income; however, if you are required to give your jury duty pay to your employer because your employer pays your salary while you serve on a jury, then you can deduct the amount given to your employer as it is no longer your income. Seems fair to me!
9. Home Office
If you run a business (or are a freelancer) and work out of your home, you may be able to deduct certain business expenses that are a part of your home such as Wi-Fi. The home office deduction is available for homeowners and renters.
10. Moving Expenses
Not all moving expenses qualify for deductions, but if you moved because of a change in your job or businesses location (starting a new job or business counts too) then you may be in luck. You might be able to deduct certain moving expenses if your move closely relates to the start of work and you meet the distance and time tests.
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