Commonly Missed Tax Deductions/Credits
Tax day is next week. If you’re one of the millions of Americans who hasn’t filed yet, you may be in luck. We have compiled a list of tax credits and deductions that often get overlooked until it’s too late. These are general guidelines, so be sure to check with a tax professional or the IRS website before taking advantage of these.
Charity
Charity comes in many shapes and sizes. If you’ve made a donation on behalf of your friend who walked for breast cancer or the neighborhood kid who jump roped for heart disease, all of those donations are deductible. So are purchases that you donate, like food for the homeless, care packages for soldiers, school supplies for needy children, etc. You can also deduct used clothes and other household items that you donate throughout the year, as well as tithing to your church. You should have receipts for all of your donations.
Child Care
If you pay for your child to be in someone else’s care because you have to work, you’re entitled to a tax credit. This is not just day care. In home babysitters and Mother’s Day Out programs also count as child care, as long as you work at least part time.
Health premiums
Many people overlook this, because health expenses must equal at least 7.5 percent of your income to count as a deduction. If you or your spouse pay so much per paycheck for employer sponsored health insurance, every dime you pay counts toward that percentage. So do prescriptions, doctor visits, etc. Your mileage to and from the doctor and pharmacy can also be deducted.
Loan Interest
Points paid on mortgage loans and refinanced mortgages can be quite valuable at tax time. If you have a home equity loan, the interest you pay may also be tax deductible.
Energy Saving Appliances
The government is allowing tax credits for certain energy-saving appliances. If you replaced a water heater, air conditioner or other home appliance in 2009, check this website to see if you qualify.
Sales-tax deduction for new vehicles
If you bought a new car, truck, motorcycle or motor home after February 16, 2009, and before the end of the year, you can deduct the sales tax paid up to a certain amount. If you bought a hybrid, you can also deduct a certain amount of the purchase price.
Contribute to an IRA
You have until April 15, 2010 to contribute to an IRA to get credit for tax year 2009. Depending on your income and how much you contribute, it could take several hundred dollars off your tax bill. If you don’t have an IRA, you can open one and make a contribution before April 15th to get the credit.
These are all legal ways to reduce your tax burden. It’s in your best interest to take advantage of as many as possible. Good luck and happy tax filing.
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