Tax Breaks You Don’t Want To Miss!
Many taxpayers pay income taxes in excess of what they actually owe by failing to take advantage of all of the tax breaks they can legitimately claim. The use of tax deductions to reduce taxable income and tax credits to reduce net tax liability can significantly reduce the total amount of income taxes owed for any given year. Failure to use available deductions and credits in addition various tax exemptions and tax incentives automatically means that you will overpay your tax bill. Therefore, as you get ready to file your 2013 tax return, you may want to review the list of available tax breaks to ensure that you are using the provisions of the tax code to your maximum tax advantage.
Listed below are some tax breaks you don’t want to miss when filing your 2013 return:
- State Income Tax If you owed state income tax with the filing of your 2012 tax return, you can deduct the amount of that payment together with any state income tax taken out of your 2013 paychecks or paid in the form of quarterly state income tax payments during 2013.
- State Sales Tax If you itemize your deductions, you are given the option of deducting either state income tax payments or an amount for state sales tax taken from the IRS sales tax tables, whichever is larger. For taxpayers who live in states where there is no state income tax, the sales tax deduction is especially important. The sales tax paid on a large purchase such as a vehicle and be listed as a separate deduction.
- Costs Incurred for Charity In addition to deducting cash and non-cash charitable contributions, taxpayers can deduct any expenses incurred while doing charitable service work. This can include mileage expenses, ingredients for food contributions and supplies purchased to support a local church or school. If you claim a donation in excess of $250 to any given charity, you must obtain a statement from the charity documenting your contribution.
- Job Search Expenses The expenses incurred while searching for a job can be included as an itemized deduction if they exceed 2 percent of your adjusted gross income for that year. Such expenses include, but are not limited to, transportation costs, food and lodging costs, employment agency fees and other advertising expenses such as the printing of resumes and business cards.
- Refinancing Points When you purchase a home, you can count the amount you pay in refinancing points as a tax deduction. If you refinance an existing loan, you can deduct the points in equal increments over the life of the loan.
- Travel Expenses for Military Reserves Military reservists can claim travel expenses incurred when traveling to and from military reserve training. These expenses can be claimed as long as the training location is a minimum of 100 miles from home had involves an overnight stay. Allowable expenses include lodging, half the cost of meals and 56.5 cents per mile plus tolls and parking fees if travel is by automobile.
- Child Care Credit Working parents are eligible for a tax break to cover the cost of child care, including summer camp. The limit for this credit is $3000 for per child which is then reduced by an incrementally decreasing percentage as income increases. The minimum credit is 20% of $3000 for families earning over $43,000. If the amount of the child care tax credit is more than the amount of the annual tax bill, you can only use whatever amount reduces the tax bill to zero.
- Energy Saving Improvements Taxpayers can deduct 10 % of energy saving improvements such as insulation up to a maximum of $500 and up to 30% of the cost of alternative energy equipment including installation. The basic deduction for energy saving equipment ends in 2013 but that for alternative energy equipment goes through 2016.
- American Opportunity Tax Credit The American Opportunity Tax Credit is good for all four years of college. The maximum amount of the credit is $2500 for those with incomes of $80,000 or less ($160,000 for a couple) and decreases for those with higher incomes. If the credit exceeds the tax bill in any give year, it will result in a refund.
- Lifetime Learning Credit The Lifetime Learning Credit is equal to a maximum of $2000 per year and can be used for any type of higher education including the improvement of job skills. The maximum credit is available to those earning less than $53,000 and phases out for those earning more than $63,000 ($107,000 and $127,000 for couples).The Lifetime Learning Credit can be used for any number of years.
If you have questions about claiming available credits and deductions or about a tax debt you are unable to pay, our experienced professionals are happy to discuss your situation free of charge. For more information about our services, call us today at 877.889.6527 or visit us at www.professionaltaxresolution.com. With over 16 years in the business of resolving tax problems, we have a thorough understanding of tax law tax together with the experience to know how to apply that knowledge to your maximum tax advantage.