5 Most Commonly Forgotten Tax Deductions You Shouldn’t Miss

Taxes and death are a major fact of life and so is overlooking claimed deductions on one’s tax returns. The accountants that are overwhelmed with numerous tax questions or returns at such a period in the year all say a similar thing: Most people are not getting what is owed to them.

When you consider exactly how much you have spent faithfully paying your taxes every year, the simple thought that you may have been receiving more back this entire time is downright discouraging. But not to worry. This is a new dawn, and it happens also to be close to the next tax year. That means there is still time to receive yours and claim your legal deductions rightly on your tax returns. Some commonly overlooked tax credit deductions you cannot afford to miss include:

1. Child Care Credit

Parents of young children paying out their nose for basic day care, you would not be left out in the tax time as well. Andrew Poulos says while it is easy to blur the children care credit with personal exemptions for claiming children on tax returns, there is a unique (and lucrative often) difference.

“The child care credit is a credit that reduces the actual tax liability, dollar for dollar. The personal exemption is only a deduction that reduces the taxable income and doesn’t have the same net effect. The credit is between 20 and 35 percent of the amount paid for child care expenses, as long as the children are up to age 13.”

2. Airline Fees or Tips

Traveling for business location as a self-employed party could mean extra deductions on the baggage fees or tips paid out to curbside airline employees, states Poulos.

“Baggage fees and tips paid are tax-deductible travel expenses, along with the cost of airfare, hotel cost and other travel expenses. It’s important for self-employed individuals to keep good records to substantiate the fees in case they get audited by the IRS,” he explains.

3. Lifestyle Changes

Whether you coupled or became single later in the past taxable year, life changes have a huge impact on one’s tax return, states Mark Steber, chief tax officer at Jackson Hewitt.

“We see a lot of people miss credits and deductions related to life changes. For example, some clients get divorced and don’t realize you can file Head of Household instead of Single, with better deductions and a lower tax rate schedule.”

4. Failing to File

If you fall under a certain level of income, you might not be needed to file tax return. However before one cheers with glee, consider saving yourself the bother also could cost them in a tax break.

“One big miss is from individuals who don’t file,” Steber states. “Under specific income levels, taxpayers are not required to file taxes. However, these folks may qualify for large credits that are available, like the Earned Income Tax Credit, which can be up to $6,242. Unfortunately nearly 1 in 5 people who qualify fails to claim it, many from not filing their taxes.”

5. Professional Tax Prep Assistance

Paying for the extra help of accountants doesn’t come easy, but it’s an expense which will pay fully for itself alone, at least in part, after those accounting fee payments are factored into one’s annual deductions.

Steber says, “Many individuals don’t realize that the cost of preparing your taxes can be claimed if you itemize your deductions. This means that having a professional tax preparer find all of your eligible credits and deductions could actually lower your tax bill. Consider that one missed credit or deduction could more than cover the cost of having your taxes completed by a tax professional.”

Sourced from: sheknows.com

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Posted on May 18, 2023