William A. Smith
7 Tax Break Opportunities You May Be Overlooking
In our last post, we discussed 8 common mistakes people often find themselves making on their tax return. Today, let’s discuss 7 tax break opportunities that you may be overlooking.
1) Out of Pocket Charitable Donations
It’s difficult to overlook the big charitable gifts you made during the year by check or payroll deduction (check your December pay stub). But little things add up, too.
You can write off out-of-pocket costs incurred while doing work for a charity. For example: say you you baked some brownies for a nonprofit ogranization’s soup kitchen. The mix, eggs, and whatever other ingredients that went into the brownies can count as charitable contributions. Remember to keep track of your receipts.
2) Student Loan Interest
Usually, you can deduct mortgage or student-loan interest only if you are legally required to repay the debt. But if parents pay back a child’s student loans, the IRS treats the money as if it were the child paying the debt. So a child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student-loan interest paid by Mom and Dad. To learn more about how this works, Contact Bill Smith, your Tax Attorney in the Dallas area.
3) College Credit for Older Students
College credits aren’t just for youngsters, nor are they limited to just the first four years of college. The Lifetime Learning credit can be claimed for any number of years and can be used to offset the cost of higher education for you or your spouse — not just for your children.
The credit is worth up to $2,000 a year, based on 20 percent of up to $10,000 you spend for post-high-school courses that lead to new or improved job skills. If you have questions about whether or not you or someone in your family is eligible for this credit, Contact Bill Smith.
4) Jury Duty Payouts
Many employers are willing to pay employees’ full salary while they serve on jury duty, though it comes with a caveat: the jurt duty bound-employee must give their jury pay to the company. The only problem is that the IRS demands that you report those jury fees as taxable income. To even things out, you get to deduct the amount you give to your employer.
But how do you do it? There’s no line on the Form 1040 labeled “jury fees.” Instead, the write-off goes on line 36, which purports to be for simply totaling up deductions that get their own lines. Add your jury fees to the total of your other write-offs and write “jury pay” on the dotted line.
5) Baggage Fees
If you’ are self-employed and travelling for business, you may be able to deduct your baggage fees from your traveling expenses. Make sure you add the cost of baggage fees and other frees to your deductible travel expenses. Contact Bill Smith, with any questions.
6) Credits for Energy-Saving Home Improvements
It appears 2013 will be the end of the road — for real — for a tax credit that’s worth 10 percent of the cost of qualifying energy savers, such as new windows and insulation. Another credit for saving energy is still alive, however, and it has no dollar limit. This credit goes to homeowners who install qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines. Your credit can be 30 percent of the total cost (including labor) of such systems installed through 2016.
7) Taxes You Pay on Social Security
If you’re self-employed and have to pay the full 15.3 percent tax yourself (instead of splitting it 50-50 with your employer), you do get to write off half of what you pay. That deduction comes on the face of Form 1040, so you don’t have to itemize to take advantage of it. For more information on this, Call Bill Smith, your Income Tax Attorney of choice in the DFW area.
These are only a handful of things you can do to get more on your tax return. If you believe you should be getting more from your return than you are, get in touch with Bill Smith, your Tax Attorney of choice in the Dallas Ft. Worth area.