April 15th will be here before you know it. If you are like me, you may be dragging your feet on filing your income tax return.
There are many income tax deductions that you may inevitably qualify for, but you do not want to miss them. Make sure you pay the taxes you owe but do not pay more than you must.
In 2009, more than 45 million Americans itemized deductions on their tax returns to the tune of $1.2 trillion dollars of savings and deductions. But the real question is: how many income tax deductions did we miss?
Did we claim all of the deductions that were owed to us? Or, did we miss a few that could ultimately cost us hundreds of dollars in savings that we could have claimed on our income taxes?
Far too many people overpay on their income taxes and do not claim all of the income tax deductions their family qualifies for when filing their income tax returns. Do not miss important income tax deductions that you can claim. Here are five important income tax deductions you shouldn’t forget to claim if you are eligible.
Five Income Tax Deductions You Can’t Forget About
1. Mortgage Interest.
The mortgage interest deduction is one of the most important income tax deductions and one that most people consider when they file their taxes. Often, the one deduction will move you from the standard deduction camp into itemizing your income tax return.
You can deduct the amount of money you paid throughout the year in mortgage interest. You can also deduct the amount of interest that you paid on home equity loans and home improvement loans.
2. Charitable Gifts.
You can reduce the taxes you owe through charitable giving if you itemize your income tax deductions. Make sure that you have the receipt and proof, though. You need a canceled check or receipt for any cash gifts you give to a charity.
You should also receive a receipt in writing from a charity for large gifts. Large non-cash gifts worth more than $5,000 typically require you to get an appraisal to use the charitable gift tax deduction.
3. Education Expenses.
You may claim an income tax deduction for a portion of your college tuition. There are income limits that you must meet, though. You may be able to deduct some of your tuition costs from your taxes if your adjusted gross income is $80,000 or less if you are filing single or $160,000 if you file a joint income tax return.
You can also typically deduct up to $2,500 from your taxes on the interest you pay for qualified higher education loans. This is if your adjusted gross income is under $75,000 if you are filing single or $150,000 if you are married and filing jointly.
Even though they are tax credits and not income tax deductions, you should not forget to see if you qualify for the American Opportunity Credit and the Lifetime Learning Credit (See IRS Publication 970). These two tax credits can be an excellent resource for taxpayers still taking college classes.
4. State Taxes, Local Taxes, and Sales Tax.
Taxpayers are typically allowed to deduct the amount they pay in property, state, and local income taxes from their federal income tax return. If you would like to deduct the amount of sales tax you have paid instead of state and local taxes, you often get that option instead of claiming the deduction for the taxes paid by state and local taxes.
You typically do not need receipts proving the amount of sales taxes you have paid throughout the year. An IRS table or online calculator is typically used to determine how much sales tax you should claim if you choose that method instead of deducting your state and local income taxes paid.
5. Out Of Pocket Teacher Expenses.
I grew up in a family of teachers. So, I know firsthand full well how much teachers, their aides, and our educators spend to give the best instruction to our children. So, please do not miss the opportunity to claim the $250 income tax deduction for teachers, aides, counselors, principals, and other educators who teach kindergarten through 12th grade who spend money out of their own pocket for an enormous amount of school supplies and instruction materials.
This income tax deduction should be so much higher because the teachers typically spend a lot more than that $250 on their students throughout the year. But it is what it is, and you should not miss this tax deduction if you provided supplies that were purchased for your classroom in 2012.
BONUS: Job-Related Moving Expenses.
If you move to start a new job, you may be able to qualify for an income tax deduction for your moving expenses. There are several rules that you must meet, though. Your new job must be at least 50 miles from your old home.
You must also work full-time after you arrive in the area at your new job. Also, the moving expenses that can be claimed are typically any that you have suffered above and beyond what an employer has paid to move you on your behalf.
Have you ever missed a deduction that you felt like you deserved? I’d love to hear your thoughts in the comment section below.