Everyone wants a little extra cash in their accounts to make their financial lives just a little bit easier. When we think of money though, we focus on things such as salary increases, taking on more than one job, or really relying on the annual tax return. While tax returns are nice, there’s a lot of money that you are entitled to that you may not even be aware of to make it that much better.
They are called tax deductions. Tax deductions are expenses that you incur over the course of the year that you can claim, therefore lowering your taxable income. This will, in the bigger picture, save you hundreds, maybe even thousands, of dollars.
Charitable Donations
Charitable donations are popular for many people but extremely looked over. This can be any donation you’ve made in the past year, either on your actual electronic paystub or through other means, such as a cheque.
As long as you have the receipts to provide accurate numbers and proof of your donations, you’re able to file it on your return and benefit the most. And while it may not seem like a lot of money, a lot of a little can turn out to create one large thing.
Make sure to also have proof from the charity. This is to validate your claim and avoid any potential issues that may arise.
Earned Income Tax Credit (EITC)
The EITC is an initiative by the US government that helps out people will generate a low-to-moderate income. It’s a credit that is taken advantage of by millions every year, but the IRA is still claiming that about 25% of eligible people are still missing out.
The exact amount of money you will be refunded depends on things like your family size, income, and family size, but it would be best to see if you qualify for it, anyway. Even if you don’t fall under a low-income bracket, you may still qualify if you’ve experienced the loss of a job, a pay cut, or worked fewer hours over the course of the year.
Student Loan Interest Payments
Did your parents pay off the interest on your student loans? If so, you may qualify for a tax deduction. While technically speaking you didn’t pay off the loan, you are still able to claim the deductible as your own.
As far as the IRS is concerned, any payment towards your student loan interest was done by you, therefore allowing you to reap the benefits. The maximum amount of deductible for this is $2,500.
College Credit Deductibles
If you do any amount of time in College or learning something that will develop a skill that you’ll use down the road, creating a $2,000/year credit that can help you out. Even if you did College or did some kind, of course, a while ago (as in, any number of years after), you’re still eligible for this credit; the IRS doesn’t care when you did it.
The only thing is, you need proof of what you spent over that course of time.
This credit isn’t available for individuals in the ~$55,000/year + category, or couples in the $105,000/year + category.
State Sales Tax
In almost every state and form of a tax return, it’s possible for you to claim your income tax or your sales tax (for regions without a sales tax). For the most part, the deductible caps out at $10,000 a year, but this is still a ton of money.
In some places, you can choose from both. This deductible really depends on how you’ve been spending over the course of the year. If you’ve made a large purchase that cost a lot of money, it may make more sense to claim your sales tax over your income tax.
This would yield a greater benefit. When in doubt, feel free to contact someone who would have more knowledge and could give you sound advice.
Medical Expenses
What many people don’t know is that there are some medical expenses and costs that you can claim, resulting in a lot of money staying in your pocket. There’s a number of different expenses that can be claimed, but it depends on where you live.
Check out your region’s tax laws or regulations for deductibles and see if you qualify for anything. Most of the time, the categories are: prescriptions, old-age care, private insurance premiums, or travel expenses to seek medical care.
To get the most out of your deductible, have you or your spouse claim all of your expenses, including your children’s.
Moving Expenses When Travelling For Work
When you move for a new job, there is almost a 100% chance that you’ll be able to claim some of the overall cost you incurred during the move.
Seeing as this move wasn’t something you decided to do on your own free will (for the most part), the government is committed to helping you as much as they can.
The exact amount you get deducted depends on many factors such as how far the move was, whether or not you needed to stop somewhere during the move to sleep, how much you spent on food, utilities, etc.
When adding these to your claims, make sure you present all proof of your expense to a professional so they can maximize your return (search for companies like https://www.quickrebates.co.uk/ that have a good track record and reliable services).
Make sure this is still in effect where you live. In some areas, starting in 2018, move claims are only allowed for members of the military that are moving due to military postings/orders.
Babysitting/Child Care Expenses
Life can get extremely busy with kids, especially as a single parent. If you’re someone who drops their kids off at daycare while they leave for work during the day, or constantly need a babysitter for business-related events, you are able to claim some of these expenses as a deductible.
How much money is credited completely depends on how much you make, the age of the children, and the percentage of the credit. Every situation is different, so be sure to consult a professional beforehand to see how much you can really be saving.
Make sure to have all receipts and payments as proof. If you’re hiring a babysitter under-the-table, simply fill out receipts for them to sign and work with that. If this is not something you’re comfortable with, there’s not much you can do on the babysitter side of things.
Conclusion
Tax deductions can be a huge factor in how much money you save at the end of the fiscal year. The biggest thing to take away from all of this is to make sure you have proof of all of your expenses, and consult professionals. A lot of the time, we try and do things on our own to save us the immediate cost of asking for help, but this only restricts us from saving hundreds, if not thousands, of dollars.
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