Do you tend to cringe at tax time when the exorbitant liability or measly refund amount is revealed? Chances are your return is missing some tax deductions or credits you’re entitled to. However, determining your eligibility is easier said than done, particularly if you aren’t well acclimated with tax law.
But don’t fret. Here are some commonly overlooked opportunities that will open the door to tax breaks and possibly more money in your pocket:
1. Education Expenses
Are you, your spouse or qualifying dependents enrolled in an institution of higher learning? You may qualify for the Lifetime Learning Credit or American Opportunity Tax Credit if the institution is eligible, per IRS standards. And, if you spent your own funds for qualified education expenses, you may also qualify for the Tuition and Fees Deduction.
2. Jury Duty Fees
If you were paid by both your employer and the courts during jury duty, chances are your employer demanded you to turn over the proceeds from jury duty to avoid double compensation. So, when filing this year’s return, don’t forget to adjust your income on line 36 of Form 1040 to account for the funds you relinquished. See IRS Publication 17 for additional information.
3. Job Search Expenses
Were you in the market for employment last year? Even if your efforts were unsuccessful, you may be able to deduct the expenses associated with a job search if you weren’t reimbursed by the prospective employer. For guidance, see IRS Publication 529.
4. Relocation Expenses
By contrast, if you managed to land employment that required you to relocate, the expenses incurred may be deductible if you meet the distance and time test. According to IRS Publication 521, “your move [meets] the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. [To meet the time test], you must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location.”
5. Child and Dependent Care Credit
If you expended funds for the care of your qualifying child who was under the age of 13 or for a spouse who is physically or mentally incapable of self-care and resided with you for over 6 months last year, you may be eligible to take the Child and Dependent Care Credit. Expenses for other qualifying individuals who meet these same criteria may also deem you eligible for the credit. See IRS Publication 503 to learn more.
6. Charitable Contributions
Did you pay it forward in 2014? According to IRS Publication 526, “you can deduct contributions of money or property you make to, or for the use of, a qualified organization. A contribution is ‘for the use of’ a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement.” However, deductions are limited to 50 percent of your Adjusted Gross Income (AGI).
7. Car Donations
If you were able to downsize your 20-year old clunker for a great deal you saw on Kelley Blue Book, you may be able to save even more. If you donated your car to a charitable organization, don’t forget to write it off. Publication 4303 provides the guidance you need to do so.
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