Best Tax Credits And Deductions Everyone Should Know About

March 24, 2015 9:00 AM

tax credits Best Tax Credits And Deductions Everyone Should Know About

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Tax time is always a confusing time of year. With so many different forms to file, charts and tables to review, and deductions and credits to claim, it can be pretty overwhelming. Sometimes, it’s easier to just skip the credits and file, but if you do that, you’ll be missing out on some big money. There are many different credits and deductions that you will want to be aware of, and they change every year. As always, be sure to check with your tax professional, but below are a few of the credits and deductions that are most commonly missed by those that prepare their own taxes.

Charitable Contributions

Everyone knows that your charitable donations are tax deductible, but you may not know just how many other small charitable contributions are also tax deductible. If you drive anywhere to work for a nonprofit, for example, you can deduct 14 cents per mile. You can also write off any out-of-pocket expenses you occurred while doing charity work. So if you baked some cookies to bring to a bake sale for a qualified nonprofit, you can deduct the ingredients of those cookies. Or if you purchased some office supplies for a fundraiser or meeting for a nonprofit, that counts as well.

Student Loan Interest

This one is a bit of change from previous years. In the past, you could only deduct the interest paid on a student loan if it was paid by you. So if your parents paid your student loan back, no one got any deductions. Now, however, things have changed. If your folks paid back your student loan, even if you aren’t a dependent, you can still deduct up to $2,500 of student loan interest, even if you didn’t actually pay the interest.

Earned Income Tax Credit

This is another credit you may have heard of, but millions of people miss out on this great tax credit every year. The Earned Income Tax Credit is a credit that ranges from $487 to $6,044 that supplements the wages for low and moderate income workers. The amount of credit you receive will vary depending on your marital status, family size and income. Plus, if you were able to claim the Earned Income Tax Credit in the past, but you didn’t, you can still file for up to three previous years.

Related: Tax Tips and Information

State Tax

If you ended up owing the state some money when you filed last year, don’t forget to include that when you itemize this year, as that is also fully deductible. You can simply add that amount in to the state income taxes withheld from your paycheck, or to the amount that you paid during quarterly estimated payments.

Childcare Tax Credit

If you’re currently paying for childcare expenses, you probably already know that the Child Care Tax Credit is an important one to claim. However, the amounts for this great credit have gone up. You can now claim up to $6,000 for the credit (it was previously up to $4,800.) However, there is a $5,000 limit if you use any sort of childcare reimbursement program through your work. Keep in mind, if you claim the maximum $5,000 through a workplace reimbursement program, you can still claim that extra remaining $1,000 (to meet the maximum $6,000), which can end up saving you a couple of hundred dollars.

For more tax tips listen in to Shep Hyken interview Lisa Greene-Lewis on tax tips that will save you money:

Deborah Flomberg is a theater professional, freelance writer and Denver native. Her work can be found at Examiner.com.