10 most commonly missed income tax deductions:
Here is a list of what I have found to be 10 of the most commonly missed personal income tax deductions.
- Child care credit – This credit can be taken as long as both parents have earned income or are listed as full-time students. The $ amount used to calculate the credit is $3,000per child up to $6,000. This can be useful if your child care costs exceeded your tax-favored reimbursement account at work. For example, if child care costs you $6,000 for the year, and you receive a $3,000 benefit from work, you may use the additional $3,000 towards the credit on your taxes.
- Earned Income Tax Credit – This is a substantial credit for low-to-moderate income workers that is very frequently overlooked or miscalculated. You could receive up to $5,571 of free money with this credit.
- Student loan interest paid by Mom and Dad – You are probably already aware that your student loan interest you pay is deductible, but did you know that interest paid by your parents toward your loan is deductble also? If you are not claimed as a dependant the IRS now considers any monies paid by your parents towards your student loans as a gift to you. Its as though they gave you a cash gift and you used it to make your student loan payments.
- Moving expense to take job – If your taking your first job out of college or your company is relocating you at your expense and the move is more than 50 miles away this deduction is for you. If you fall in this category you are allowed to deduct any costs related to the move including but not limited to mileage, tolls, parking, hotel, etc...
- Jury pay paid to employer – Some employers will continue to pay your full salary while you are fulfilling your civic duty, but ask that you hand over your jury fees to the company. The only issue is that the IRS requires you to report those fees as taxable income. If you give the money to your employer you have the right to deduct the amount so your not taxed on money that you didn't et to keep.
- Reinvested Dividends - Some of you may have no idea what this is...there isn't really a deduction here, but can save you a lot of money. It's also happens to be something that many taxpreparers miss. If you have your mutual fund dividends automatically reinvested in additional shares, don't forget that each reinvestment is considered an increases to your “tax basis” in the fund. By keeping track of your reinvested dividends you will reduce the amount of taxable capital gain (or increases the tax-saving loss) when you sell your shares. By forgetting to keep track of this you are overpaying your taxes, which nobody wants to do