1. 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.
2. 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.
3. 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!
4. 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.
5. Education Credits
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!
6. 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!