No one looks forward to paying their taxes but it is something that we all must do. While paying your fair share matters you do not want to pay any more than you are required to pay! The income tax code is very complicated which might explain why many American citizens are not aware of some of the deductions that they can claim on their tax returns. There are many. Here we look at five of the most often overlooked tax deductions.
Going Green Deduction
If you have been environmentally conscious then this may equal a few extra dollars in your pocket when tax time comes around. The tax deduction for going green is actually more of a tax credit which will be subtracted from the amount of taxes that you owe.
You are eligible to receive a tax credit of up to 30 percent of what you paid for an approved energy-efficient heating and cooling product (s). Examples of these would be geothermal heat pumps and solar water heaters.
In the same way you can receive a tax credit of 30 percent (up to a maximum of $1,500) of what it cost you to make energy saving repairs or improvements to your home. It must be your primary residence that the improvements were made to. Examples of this would be replacing windows, insulating your attic, or installing an energy efficient heating and cooling system.
Investors Tax Deduction
As an investor you are very conscientious about how and where you invest your money. Can the same be said when it comes to claiming expenses related to investments on your tax return? You can claim the annual fees you paid to your financial advisor as well as the mileage it costs you to go to see your broker or advisor. You can also claim for having a safety deposit box and for all investment publication that you subscribe to.
You volunteer because you have a heart of gold and want to be of service to others. Uncle Sam understands and appreciates this and wants to help you every step of the way. If you do volunteer work you can deduct for the miles it takes you to drive to the charity work you do. The mileage rate has remained unchanged from 2010- it is 14 cents per mile. Many people are not aware of this tax break. Now that you are you can put it to good use.
Other charitable expenses can also be claimed on your tax return. If you donated clothing to a homeless shelter or food to a soup kitchen then you can claim those expenses. If you donated items for a school fund raiser then that is also a charitable contribution that can be deducted on your tax return.
Baggage Fee Deduction
Those who travel for business may have the option of deducting baggage fees when they fly. If your business trips necessitate that you bring materials or supplies with you and you place these items in checked baggage then you can deduct the fees you pay on your taxes as business expenses.
Working Parents Deduction
If you are a working parent who places your child in day care or takes advantage of a nanny service then there is a tax credit to help you with your expenses. You can reduce the taxes you pay by up to $3,000 for one child and up to $6,000 for two or more children who are under the age of 13 years.
The percentage of credit you will receive will range from 20 percent to 35 percent of the total costs you pay for child care. This is dependent upon your gross income. There are specific rules that apply to this often overlooked tax deduction which is why you must ask your tax advisor for more detailed information in this regard. To give a concrete example of this deduction, if you gross $43,000 or more annually then you can claim a 20 percent credit for child care expenses. That means that if you spend $8,000 per year on expenses for child care then you will save 20 percent off the first $3,000 you pay (or what works out to be $600).