Each year the Internal Revenue Service (IRS) reports the most common tax deductions taxpayers forget about when submitting their income tax return. Among one of the most common mistakes taxpayers make is they forget to place their Social Security number on the form or they make a mistake when entering the information.
It is possible for some taxpayers to be overpaying so it helps to make sure you review deductions available and understand how to claim them correctly to obtain the credit. Below is a list of the most common deductions overlooked by taxpayers:
- State sales tax: Taxpayers who live in a state that doesn’t impose an income tax often forget to claim this deduction. The IRS has a table that can be used to help you figure out the amount to deduct.
- Charitable contributions: This includes charitable deductions from your paycheck, items purchased for a charitable event such as a fundraiser or if you drove your vehicle for charity, the IRS lets you deduct a certain amount per mile. Save all receipts and if you make a donation of 250 or more, get written confirmation from the charity.
- Student loan interest: If mom or dad paid for a student loan for a child not claimed as a dependent, the interest can be claimed on your return.
- Moving expenses: If you moved to take a new job, the expenses related may be deductible.
- Child care credit: Having a credit can help reduce taxes owed. If your expense is paid through an account at work, it is easy to overlook but if you pay several thousand for child care it helps reduce taxes owed.
- Earned income tax credit: While the rules to this may be complex, many taxpayers don’t claim it. This is considered a refundable tax credit instead of a deduction.
- State tax paid last spring: If you paid state income taxes in quarterly payments or had them withheld, they can be deducted on your current return.
- Energy-saving home improvement credit: This is a credit that is 30 percent equal to the cost of energy-saving improvements. The IRS provides details on qualifications for this credit.
- Jury duty payments: If your employer required you to give them payments you receive for jury duty, you can claim the amount on your return.
- Refinancing points: There are points that can be deducted when you refinance your home at one time. This depends on how many years are on your mortgage and you can deduct points that are remaining if you sell you r home after paying if off or refinance again.
Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from credit cards to mortgages to loans.
- Make the Best of Your Small Business Tax Deductions (2011taxes.org)
- How to Choose A Good Accountant or Tax Attorney (2011taxes.org)