Tax Time Savings Tips

DAYTON, Ohio (WDTN) — Deductions and credits can decrease the amount you owe each year to Uncle Sam by lowering your taxable income. But the IRS says many Americans don’t realize there are several expenses that are part of everyday life they aren’t claiming.

  • Charitable Contributions

If you made non-cash donations to non-profits, such as the Salvation Army or Goodwill, those donations are tax deductible. This includes items such as clothing, shoes and furniture. Just make sure you get a receipt. If you’re ever audited, you’ll need to prove you made the donation.

  • Higher Education

If you, your spouse, or a dependent took a college course, you can deduct up to $4,000 for tuition, fees, and supplies. But there are qualifications. For example, your adjusted gross income can’t be more than $65,000 or $130,000 on a joint return.

  • Energy Credits

If you made home improvements, or installed equipment designed to save on energy costs, you could qualify for a 30% credit. This includes solar hot water heaters, solar electricity equipment and wind turbines.

  • Job Hunting

If you were looking for a job last year, you could be eligible to write off some of those expenses even if you didn’t get the job. This includes expenses for preparing and mailing resumes, fees to job placement agencies, and even fuel and hotels.

  • Earned Income Tax

This credit could be worth up to $6,000 depending on your income and how many children you have. The IRS says one in five taxpayers overlook this opportunity.

  • Gambling Losses

You might qualify for a credit if you itemize your deductions. But the amount of loss you deduct must be less than your winnings, which must be reported as taxable income. For example, if you have $2,000 in winnings, and $4,000 in losses, your deduction is limited to $2,000. Again, make sure you keep your receipts in the event you are audited.

In terms of errors, The IRS says most come from paper returns. The most common mistakes are incorrect or missing social security numbers and incorrect tax entered based on taxable income and filing status. It also sees a lot of returns that have withholding and estimated tax payments entered on the wrong line. The number one reason for mistakes are addition and subtraction errors.

blog comments powered by Disqus