Some tax deductions and credits are overlooked more than others. Most taxpayers don’t miss deducting things like mortgage interest and property taxes. But the list below includes several items that are often neglected.....
Some tax deductions and credits are overlooked more than others. Most taxpayers don’t miss deducting things like mortgage interest and property taxes. But the list below includes several items that are often neglected.....
Feel free to share these 10 items with your clients so they don’t miss these deductions and credits:
1) Education Expenses
There are two main credits for education. The American Opportunity Credit can be taken for the first four years of college and is eligible for a maximum credit of $2,500 per student. The Lifetime Learning Credit can be claimed for an unlimited number of years and is worth up to $2,500 per year. Remember, deductions lower your taxable income, while credits reduce your tax liability dollar for dollar!
2) Motor Home, Boat, Travel Trailer
The interest paid on the above items may qualify as a tax deduction for your “second home”. In order to be deductible, the property must have sleeping, cooking, and toilet facilities.
3) Goodwill Donations
Donations of clothing, household items, etc. to Goodwill and other qualified organizations can earn you a nice tax benefit. Be sure to record the fair market value of the property donated, along with keeping receipts and a list of items donated. We have a checklist on our website to help you with this. Visit ChadPeshke.com/tax-worksheets to access this resource.
4) Home Office Depreciation
If you claim a home office on a house you own, don’t forget to provide your tax preparer with cost basis information on your home for depreciation. The IRS requires that you account for depreciation anyway, you might as well get a tax benefit in the meantime! Check out our Home Office Deduction worksheet.
5) Vehicle License Fees
California vehicle license fees are considered personal property. Personal property taxes can be deducted on your tax return. The eligible expense for a tax deduction is the amount you paid for “License Fees” on your DMV registration renewal.
6) State Sales Taxes
In states where there is no income tax, or in years where you purchased a car or boat with high sales tax, it may make sense to check out itemizing your sales tax. This deduction can save you hundreds, if not thousands, of dollars.
7) Points for Purchasing or Refinancing Your Home
Points are fees paid upfront in exchange for a lower interest rate on your loan. Points paid for the loan of a home purchase can be deducted all at once in the applicable tax year. Whereas refinance loan points are deducted over the life of the loan. Don’t forget that a refinance may end the life of a previous loan, allowing all unused points paid to be deducted at once.
8) Previous Year State Tax Liability
This deduction is often missed when people switch tax preparers, since the information doesn’t automatically rollover to the new preparer’s return. For instance, if you owed taxes as a result of your 2014 tax return preparation, those taxes were likely paid by you in 2015. So those taxes paid can be itemized on your 2015 tax return. Make sure your preparer isn’t missing this one!
9) Child Care Credit
Child care is expensive. So at least make sure Uncle Sam is helping you foot the bill! You can reduce taxable income via your employer’s child care reimbursement plan, and/or via the child care tax credit, which can be taken up to 20%-35% of what you pay. Let us know if you have questions on the right structure for your situation. Generally the higher your income, the better it is to maximize your employer’s reimbursement plan options.
10) Residential Energy Credits
The windows and installation credit may be gone, but there’s still a credit available for solar items up to 30% of the total cost. Don’t’ forget to include these on your taxes!
Feel free to contact us with any of your tax questions...we’re here to help!