It may not be tax season right now, but it’s always a good time to organize your affairs so that you’ll be able to claim the maximum number of tax credits when the time comes. Whether you hire a professional accountant to do your filing or you use an online tax filing service, you should know your rights. Unfortunately, the large majority of Americans aren’t familiar with how to maximize their tax credits and deductions. Read on to learn about some oft-forgotten tax credits – or some you may never have known about until now!
Student loan interest. The 2008 census concluded that 27.4% of Americans hold a bachelor’s degree or another advanced degree. If you’re one of them, chances are good that you have a student loan hanging over your head. While this may be overwhelming, there’s an upside – you can (and should!) request up to $2,500/year as a tax deduction for your loan interest.
Health insurance expenses. Did you know that you are entitled to a tax deduction for many health insurance premiums that you pay, and possibly for long-term-care premiums too. In order to qualify for a tax deduction, these fees must be added to your medical expense pot, and your health insurance premiums must surpass 7.5% of your adjusted gross income. This restriction applies to salaried employees only – if you are self-employed you can claim 100% of your health insurance premiums as a tax write off.
Alimony. You may be bummed about having to pay alimony, but at least there’s a chance that you can use this expense as a tax deduction. Restrictions vary by state, so it’s worth consulting with an accountant if you pay alimony to see if you qualify.
Home office costs. Having a home office allows you to save money on the commute, but the associated expenses can also be used as a tax deduction in many instances. If you use a home office as your primary place of conducting business, you can likely save on taxes by deducting many of the business-related expenses such as part of your electric bill or gas bill. Just make sure to keep good records of all your bills and payments so that you can make the proper claims when the time comes.
Non-cash donations. There’s no question that if you give cash to a charity you’ll be entitled to a tax deduction, but many people forget that they’re entitled to a similar deduction when they donate non-cash items such as clothing, toys or books to charity.
Good luck claiming these tax credits – I’m sure that you can put this ‘found’ money to good use!