Tax season is upon us, and to get organized and prepared for the grueling task of filing your taxes, it’s important to be aware of all the deductions and tax credits available to you. Here are some commonly missed tax deductions; by taking advantage of them, you have the potential to save hundreds or thousands of dollars.
1. Sales and Income Tax
Many filers forget to include state sales and income taxes paid as deductions. If you live in a state that doesn’t impose an income tax, tallying up all the tax you’ve paid on personal and household items can really add up in savings.
On the other hand, if your state does have an income tax, it’s usually a better strategy to claim that as a deduction for more savings unless you made some big-ticket purchases such as a car or boat.
2. Demutualization
If your insurance company switched its status from being a mutual insurer and began offering stock to stockholders, this process of demutualization will save you money if you sold your shares based on what the shares were worth when they were distributed to you as a former policyholder.
3. Charitable Donations
Out-of-pocket charitable contributions are often overlooked, especially if they were in the form of many small donations rather than a few large ones. If you’ve covered the cost of postage, baked cookies for fundraisers or given rides to the clients of nonprofit organizations, save your receipts. If they total more than $250, you can deduct the amount if you have documentation from your favorite nonprofit. If you provided rides or did other significant driving for a charity, claim 14 cents per mile as well.
4. Child Care
If you’re a working parent and your kids spend part of the day with a sitter or in child care, claim those expenses as a tax credit. If you have child care reimbursement through your place of work, you can easily overlook the additional costs you incur beyond the $5,000 or $6,000 allocated by these accounts.
Don’t miss out on significant savings; save the receipts for sitters and after-school care. If your children are older and in college, don’t forget to deduct the interest you’ve paid on their student loans throughout the year, if applicable.
5. Job Search
Job losses and career changes aren’t all bad. If you were looking for a job last year and had to travel for interviews, you can deduct those costs up to 2 percent of your adjusted gross income (AGI).
If you are a first-time job seeker, you can’t claim those deductions, but you can claim your moving expenses if the new job is more than 50 miles from your old place of residence. You can claim the costs of moving your belongings to the new site and driving your vehicle there as well as parking and toll fees.
6. Mortgage Interest and Remodeling
If you’re a homeowner, your luck continues. If you remodeled your existing home, deduct state sales tax for building materials if you’re itemizing. If you bought your house, be sure to claim the interest paid on your mortgage points.
If you’ve refinanced, you have to distribute the points interest over the life of the new mortgage. If you’ve made your home more energy efficient, there are tax deductions for that, too, including a 10 percent deduction on costs up to $500, as well as 30 percent off the cost of certain major upgrades through 2016, known as the Residential Energy Efficient Property Credit.
7. Military Travel
If you are a member of the National Guard or are a military reservist, part of your travel expenses for attending meetings or drills more than 100 miles from home and overnight stays are deductible, even if you don’t itemize. You can write off all your lodging cost and half your meal expenses; the 2 percent AGI limit does not apply.
8. Self-Employment
After years of widespread job loss, many Americans opted for self-employment — but this freedom does come at a price. Workers not only have to buy their own health insurance, but also pay a hefty self-employment tax. Make sure to deduct the cost of health insurance premiums you pay for yourself and your family, which reduces your self-employment tax.
Additional 2015 tax deductions for the self-employed include contributions to a Simplified Employee Pension (SEP) IRA, which are made pre-tax, as well as the cost of business meals, ongoing education or training and business use of your home.
This article was written by Bob who runs ChristianPF.com, a personal finance blog tackling the topic using Biblical principles.