You know you’re definitely an adult when you file your first income tax. If you’re still new at filing taxes, then you may not be familiar with expenses that you can write-off, that’s right you don’t have have to pay taxes for them. Don’t worry we’ve done the work for you and have made a list of tax deductions that you may quality for and will save you money, you’re welcome.
The American Opportunity Tax Credit
If you’re still working on your undergraduate degree, are in your first four years of study and maintain at least a half-time load, the IRS offers this credit for qualifying educational expenses. The credit covers the cost of tuition, books, miscellaneous institutional fees and equipment. Even if your college didn’t require you to purchase these items, you can still deduct the cost if they are listed as required materials at the time of your attendance.
The Lifetime Learning Credit
If you are still taking classes and you have already finished your first four years, you qualify for this credit. Under this credit, you can deduct the cost of tuition and any course materials you purchased from your college. To apply this credit, you must meet income requirements, be independent and aren’t filing as married but separate.
The Student Loan Interest Deduction
If you still have loans you’re paying off for either your undergraduate or graduate education, you might be able to deduct up to $2,500 of interest per return per year. A student-loan interest is interest you paid during the year on a student loan. You qualify if the education expenses were a) for you, your spouse or a dependent of yours b) paid within a reasonable time period before or after you took out the loan or c) for an academic period for an eligible student.
You can also deduct interest if your parents pay back your student loans and you use the money to pay your debt because the IRS sees this as your parents giving you money. You can deduct up to the same amount $2,500 as long as you are not claimed as a dependent by your parents.The Traditional IRA Deduction
If you have a retirement plan at work, you can deduct up to the smaller of $5,000 or taxable compensation for contributions.
HSA Deduction
A health savings account (HSA) is a medical savings account created so that individuals who are covered by high-deductible health plans could receive tax-preferred treatment of money saved for medical expenses. You may deduct your HSA expenses as an above-the-line deduction, if you make a post-tax contribution to your HSA.
Job-Hunting Costs Deduction
If you were looking for a job, make sure that you kept track of your job-search expenses. If you were looking for a position similar to your current or most recent job, you can deduct the costs as miscellaneous expenses if you itemize. These costs include transportation (56 cents a mile for driving your own car plus parking and tolls), food and lodging expenses if you’re staying overnight for your search, cab fares, any fees paid to employment agencies, costs of printing resumes, business cards, postage and advertising. Even you don’t find a new job, you can still write off these expenses as long as they are more than 2% of your adjusted gross income. Sadly, this does not apply to first-time job hunters.
Moving Expenses Deduction
If you had to relocate for a job during the year and it was at least 50 miles from where you last lived, then you may qualify to deduct expenses. You can deduct your moving expenses if you meet the following requirements: your move is close to the start date at your new job, you meet the distance test and you meet the time test. The costs you can deduct include the cost of traveling (24 cents per mile or the amount you pay for gas and oil for your car), cost of packing/transporting household goods, costs of connecting/disconnecting utilities, storage expenses, etc. For a complete list of deductible expenses look at the IRS Publication 521.
State Sales Tax Deductions
This is especially for people who live in a state that does not have a state income tax, Congress allows you to choose between deducting the state income taxes or state sales taxes they paid. If your state doesn’t have an income tax, then deducting the sales tax is more beneficial to you.
Charitable Deductions
Keep track on items you’ve donated to Goodwill or any charitable gifts, even the ingredients you made for casseroles you prepare for a nonprofit organization’s soup kitchen and stamps you buy for a school’s fund-raising mailing count. If the total of your charitable deductions is more than $250 and you have proof from the charity of your support, then you can go write these costs off too.
And don’t forget the Earned Income Tax Credit and the Saver’s Credit.
(Feature Photo via We Heart It)