Nothing in life is certain except death and taxes, and right now, tax season is upon us. It’s something we never really understood growing up, aside from that it meant we could expect to see tons of little papers around the house and our parents grumbling about money. Now that could easily be us. Though the process can be daunting, but it doesn’t have to kill you (and thus confirm the “death and taxes” saying). Here are some credits and cuts to keep in mind as you pay your taxes.
As long as you maintain receipts, you can receive tax credits for donating cash or belongings to charity. If you volunteered somewhere, say a soup kitchen during the holidays, you may deduct 14 cents per mile driven to and from the location. If you volunteered at a hospital and were required to pay for a uniform during your time there, the cost of cleaning and purchasing the uniform may be deducted.
6. Foster parenting (and having dependents)
In some circumstances, foster parents may claim foster children as dependents and are therefore entitled a $3,700 deduction from their total taxable income on their tax return. The Internal Revenue Service Publication 501 states this is acceptable when a married couple has raised a foster kid for at least six months and paid a dollar more than half of what it costs to care for said child. Kids who aren’t from foster care can also be listed as dependents.
5. Child care
Depending on income, the Child and Dependent Care Credit can help cover 20-35% of the cost of day care. It’s also applicable to summer day camp, but not sleep away camp. Children aren’t cheap, and the same goes for day care, so anything to keep the costs down is a big help.
4. Job searching and moving
If you relocated 50 miles or more for a job, you might be able to deduct some of those expenses. The thing is, it has to be in the same line of work. If you’re on the hunt for a job, it’s also possible to deduct business card costs, resume preparation, some travel costs and various other expenses.
3. Self-employed travel
If you work for yourself and traveled last year, you may deduct your travel expenses. Baggage costs are deductible as well, so try not to stress over that $25 airline fee you shelled out.
We all know education is way pricier than it needs to be (and is only going to get worse), but thanks to the American Opportunity Credit, parents and students can receive cuts for college costs. People whose modified adjusted gross income is $80,000 or lower or married couples earning $160,000 or less are eligible for the full credit, which isn’t allowed for taxpayers with incomes higher than these.
1. Medical costs
If you had medical costs coming out to more than 10 percent of your adjusted gross income, you may reduce your taxable income. Self-employed individuals are permitted to deduct their entire insurance premium under the condition that they earned a net profit for the previous year and aren’t covered by another employer, and that includes through a spouse as well.
Feel free to add your own tax tips or cut additions in the comments thread.