5 Often Overlooked Tax Exemptions
When It Comes to Tax Time, Every Little Bit Helps!
When it comes to tax time, everyone wants to get the most out of their return by minimizing what they owe. Most people get some type of refund, depending on their financial circumstances. Claiming all possible deductions ensures the taxpayer’s money is actually working for them. Check out these five overlooked tax breaks.
1. Last Year’s State Tax
When filing last year’s taxes, there may be a chance that there is money owed, especially if the taxpayer is a small business owner. An accountant or tax preparer should catch any debts that need to be paid right away, but if the taxpayer is doing the preparation themselves, they need to remember to include what was paid out last year. It’s important to calculate the amount and add it with the state itemized deduction. All estimated quarterly payments owed or state taxes withheld from paychecks should be included, too.
2. Mortgage Refinance Points
Happen to refinance a mortgage last year? If so, don’t forget to count it toward a deduction on taxes. When refinancing, a homeowner must deduct points or prepaid interest for the entire length of the loan. Mortgage points vary across the board, depending on the remaining balance and loan type. While it may only equal out to be a small amount, it will chisel away at the total owed toward taxes.
3. Additional Charity Contribution Expenses
Helping others and giving back is rewarding in many ways. While charitable contributions via check or through payroll deduction can add up annually, there’s still an option to get some out-of-pocket costs back and reduce the amount owed to the IRS. Mileage, food purchased for charity events and stamps used to mail out flyers for a fundraiser are just a small portion of what can be claimed as a contribution on taxes.
4. Student Loan Interest
College students know about deducting student loan interest on taxes because every little bit helps. But what about if the parents are paying on those student loans? The IRS now allows the child, as long as they’re not a dependent on their parent’s return, to deduct up to $2500 of student loan interest that their parents paid. The caveat is that the loan has to be under the student or child’s name, not the parent.
5. Jury Duty Pay Deductions
For taxpayers who participated in their civic duty to serve on a jury, there are a lot of costs involved. Time off work and mileage are usually reimbursed by the state or county. Some employers request employees to turn their jury duty reimbursement amounts over to them if they paid the employee for the time off. This needs to be reported to the IRS as income, but the good news is that it can be deducted come tax time.
The main goal is to reduce the total amount owed to the state or IRS. Knowing what deductions apply and which filing status to use will help reduce the total amount a person owes and keep more money in the taxpayer’s pocket.
~Here’s to Your Financial Health!
Copyright 2020, FinancialHealth.net