Remember These Important Tax Deductions and Credits

Financial tips

Remember These Important Tax Deductions and Credits

Posted by Infinite Wealth Advisors, LLC
8 years ago | April 11, 2016

Portrait of happy senior man with computerNow that Spring is in full swing, it’s time to file your federal income taxes. The deadline to file your tax return this year is April 18, and if you’re like a lot of people you haven’t even gotten started! Try not to get into such a rush that you overlook important tax deductions and credits; specifically, take a look at these six strategies that can save you a bundle on your tax bill.

Claim your charitable contributions. You can claim charitable contributions that you made throughout 2015, but only if the money went to a charity qualified by the IRS. You must also keep records of your contributions. A bank statement, credit card statement, or a receipt from the charity itself will suffice. If you drove your car for charitable purposes, you can deduct 14 cents per mile driven.

You might be able to deduct state and local taxes. Remember that you can deduct state and local income taxes. Or, if you lived part or all of the year in a state that does not impose income taxes, you can deduct state and local sales taxes. If you get a choice, the income tax deduction is usually the better deal. If you need help figuring out which deduction you should claim, use the simple calculator provided by the IRS.

Moving expenses are deductible. If you had to move more than 50 miles in order to accept a job, then you can deduct moving expenses on your tax return. All parking fees and tolls are deductible, and you can count mileage at 23 cents per mile.

Claim your student loan interest. If you’re one of the millions of Americans saddled by student loan debt, this deduction can help you quite a bit. The IRS allows you to deduct up to $2,500 of student loan interest if you both incurred the debt and paid it yourself. You can also take the deduction if someone else (such as your parents) made the payments on your loan. Unfortunately, parents cannot claim the interest that they paid on their child’s student loans.

Claim your Child and Dependent Care Tax Credit. Claim up to $6,000 if you paid cash for child care, or up to $5,000 if you pay through a reimbursement account at work. Also, remember you can claim this credit if you pay for care for an adult disabled child.

Did you refinance your mortgage? When you refinance your home, points paid must be deducted over the life of the loan rather than all in one year. For example, if you chose a 15-year mortgage, you can deduct 1/15th of the points each year for fifteen years. So if you’ve ever refinanced, don’t forget to claim this deduction each year! On the other hand, if you sell the home before you’ve paid it off, you can deduct the remaining points on that year’s tax return.

These are only five of the tax deductions and credits that people most commonly forget. Depending upon your situation, there might be many more deductions or credits available to you. Work with a qualified professional to identify each and every tax break to which you are entitled. For information on tax deductions related to retirement savings, or to invest your tax return for the future, give us a call and we will be happy to help.

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