7 Tax Deductions You Probably Haven’t Considered

April 15 — the day every American dreads as it’s when income tax returns have to be submitted to the federal government. Leading up to this day, everyone worries about if they’ve filled their taxes correctly and how much money they owe to the government. Smart tax filers know that you don’t always have to owe the government money and if you know which deductions to take, you can end up getting refunds.

To reduce the amount of taxes you owe and to increase the chances of getting a refund, it’s important to understand which deductions you need to take. These are the most common deductions that are overlooked, so be sure to consider them when you file your taxes this year.

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State Sales Tax

Did you know you can write off what you’ve paid in state and local sales tax and that you can deduct state and local income tax? Because sales tax is part of almost any charge, especially when you consider big-ticket purchases like cars, the deductions can add up to thousands of dollars.

To get the deduction, you’ll have to itemize your deductions and the max deduction is limited to $5,000 for solo filing and $10,000 for joint filling. The deduction is only valid in states without an income tax.

Out-of-Pocket Charitable Contributions

Your charitable donations can come with some benefits to you—whenever you donate to a charity you can deduct your donations of any amount when you file taxes. The only catch is the charity has to be a nonprofit organization that’s recognized by the IRS. This includes contributions to your local charity or donations to your former university. Also, any out-of-pocket expenses associated with volunteering your time or charitable donations can be written off.

Moving Expenses For a New Job

It turns out that if you moved to a new city for your first job within the past year, that you’re eligible to deduct your moving expenses. You can even take the write-off if you didn’t itemize your deductions by just getting the standard deduction and deducting your moving expenses.

Student Loan Interest Paid by Parents

Even if your parents have been helping you pay off your student loans, you can still get a tax break. This is because the IRS sees parents’ payments as money being given to the child or loan holder that’s being paid towards the loan. The only catch is you can only deduct a set amount of the interest you paid over the past year and you can’t be claimed as a dependent.

This is also another deduction you don’t have to itemize, which makes it easier to file your taxes.

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Earned Income Tax Credit (EITC)

EITC is often missed by many as they don’t know what it is. TurboTax reports that the EITC is a tax credit, not a deduction, of up to $6,431. The credit is aimed to help out low-to-moderate-income workers who have lost a job, took a pay cut, or worked fewer hours during the year. The credit you receive depends on your annual income, the size of your household, and your filling status.

State Tax Paid Last Spring

If you paid taxes after the filing deadline, you can deduct the state tax payment from your total income. To qualify for this deduction, you have to include the amount you owed and paid on your newest tax return and any state income taxes that were withheld from your paychecks during the past year. Just know that there is a limit on these taxes.

Mortgage Refinance Points

Did you refinance your home mortgage this year? If you have, remember to deduct your mortgage refinance points! According to TurboTax, when you refinance your mortgage you can deduct the points over the lifetime of the loan. So, if you have a 50-year mortgage, you can deduct 1/50th of the points each year, which ends up with a write-off of $20 for every $1,000 in point you pay. This amount can add up quickly if it’s taken each year. And, if you’ve completely paid off your loan, you can deduct additional points.

More Tips to Avoid Missing Deductions

There’s no doubt that filing taxes is stressful, and in the process, many people don’t realize how many deductions they’re eligible for. That’s why there are tax professionals to give you tax preparation help and to ensure that you get the most out of your taxes. But, if you can’t afford to hire a tax professional there are other cost-effective options available like free tax software providers and filing companies. There are also online forms that allow you to file your taxes online and downloadable software and apps that make the whole process easier.

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Ariel H
Ariel is a chocoholic - she loves chocolate, all types of chocolate. Fashion is her next love, she enjoys following all the latest fashion trends. During her free time, you can catch her snuggling up with her two kitties or binge-watching Netflix.