This isn’t a tax benefit that you’d take on your tax return, but a benefit that avoids tax up front by providing employees savings on their daily commute to work through pre-tax (federal and FICA) payroll deductions.

First, the de minimus transportation benefit. “De minimus” is Latin for “about minimal things” and when the IRS uses the term, they are stating there are some matters that are deemed too small to worry about for tax purposes. In this case, we’re talking about the occasional transportation benefit that an employee might get when working overtime, such as cab fare to get home safely.

Next are the four Qualified Transportation Benefits.

Regular transportation in a commuter highway vehicle – This is similar to carpooling, only the employer is providing the ride every day. The vehicle needs to seat six or more passengers and regularly run more than half full to qualify. 80% of the miles must be driven between worker’s homes and the workplace, presumably to avoid personal detour requests. In congested cities this is a great way to be green, provide a bit of employee camaraderie, and save the employees some money with no tax consequences.

Transit Passes – This includes a pass (e.g. the Metrocard) to get you on your local mass transit system, or let you hop onto to a van service to get you to work. Note: There is a $245 per month limit for combined commuter highway vehicle transportation and transit passes.  Transit may include bus, ferry, rail, and vanpool.

Qualified parking – If there’s no on-site free parking, your company might provide for a paid spot near or at your office building. Qualified parking also includes the fees you’d pay to park your car at the commuter rail, mass transit, or the lot where that commuter highway vehicle picks you up. This benefit is tax free to you for up to $245 per month and is in addition to the $245 limit discussed prior.

How about really green? Your employer can reimburse up to $20 per month toward the purchase of a bicycle, as well as cost of repairs, improvements, and storage. The ‘qualified bicycle commuting months’ are only those months for which the other three Qualified Transportation Benefits are not received.

In a sense, this is an invisible benefit.  So long as the value involved does exceed the limits discussed, you won’t see this listed as taxable income on you W2 at year end. Your wallet still enjoys the savings as these numbers can add up to $5880 that wont be taxed when you file your return.  And the planet will thank you for burning a bit less gas in the process.

Tax Deductions and Exemptions-  The tax law provides a standard deduction for those who don’t claim itemized deductions. For 2013 the standard deduction increases to $6,100 ($12,200 for married filing jointly), up from $5,950 ($11,900 for married couples) in 2012.

The personal exemption rose as well, to $3,900 in 2013, up from $3,800 in 2012.  There is a limitation on the itemized deductions and personal exemptions for taxpayers with incomes of $250,000 or more ($300,000 for married couples filing jointly).

The maximum Earned Income Tax Credit is also up: in 2013 a couple filing jointly with three or more children can nab a credit as high as $6,044, up from $5,891 in 2012.

Tax Rates-  As inflation drives wages up, the amount of wages taxed may be less. In tax year 2013, for each of the marginal tax rates - 10, 15, 25, 28, 33 and 35 percent – you will continue to see a reduction in the amount you’re taxed since income limits taxed at lower tax rates were increased.  In 2013 individuals were also given a tax break because Alternative Minimum Tax income limits increased allowing less taxpayers to be subject to this additional tax.  Income above $51,900 ($80,800, for married couples filing jointly) may be subject to the Alternative Minimum Tax, up from $50,600 ($78,750 for married couples filing jointly) in 2013.

There are some changes for high-income taxpayers in 2013. A new tax rate of 39.6 percent has been added for taxpayers whose income exceeds $400,000 ($450,000 if married filing jointly).

Gifts – Gifts you give over a certain amount must be disclosed to the IRS by filing a gift tax return. For years, gifts under $10,000 were exempt, and that’s the amount many people remember. But in actuality the exclusion amount has been going up for a number of years. In 2009 through 2012 it was $13,000, but beginning in 2013 you can gift anyone up to $14,000 a year without filing a gift tax return.

Retirement plans -  If you contribute to a 401(k) or other voluntary salary reduction plan such as a 403(b) or a TSA, in 2013 you’ll be able to contribute up to $17,500 to the plan, up from $17,000 in 2012. If you are 50 or older you can contribute an additional $5,500, for a total contribution of $23,000.

If you are self-employed and have a SEP IRA, for 2013 you can sock away 25% of your gross income, up to $51,000 of retirement contributions. That’s $1000 more than last year.

IRA contributions are also on the rise. You can contribute up to $5,500 a year to your IRA (that was $5,000 last year), plus an extra $1000 if you are at least 50. To contribute the full amount to a Roth IRA, your income  must be $188,000 or less if you are married filing jointly ($127,000 for singles), up from $183,000 in 2012.

Remembering these IRS inflation adjustments will help you plan throughout the year and save at tax time.

The idea of income  can be complicated given the different types of pay a service member receives. First, you have your pay, then living allowances and moving allowances, travel allowances and then combat pay. Some are subject to tax and others are excluded, all must be reported. It’s a good thing you can use TurboTax Military Edition for your last minute tax filing so you can easily be guided through these special tax benefits and can keep more of your hard-earned money.

Here are 5 last minute tax tips for military that will help you save when you go online and file your taxes.

1.  Combat Zone Exclusion

If you are deployed in a designated combat zone, which are designated by an Executive Order from the President and listed here on the IRS website, then part of your pay is excluded from taxation. Afghanistan has been a combat zone since September 19, 2001. In practice, the income that is excluded as a part of this will not appear as wages on your W-2. If you look at your W-2 and it doesn’t match what you’re paid, it’s because of the exclusion. If you do have excluded pay on your W-2 and it shouldn’t be, then you need to get a corrected form from your finance office.

2.  Selling Your Home

This is not a military-only tip but given how often service members move, it’s one that you may be able to take advantage of. If you’ve lived in a home for two out of the last five years, you are allowed to exclude up to $250,000 of gain ($500,000 if you are married) on the sale of that home from your taxes. These are the same rules as for civilians but you can have the 5 year test suspended if you serve on qualified official extended duty.

3.  Travel Expenses

If you are a reservist and travel more than 100 miles away from home to perform your duties, you can deduct unreimbursed travel expenses as a miscellaneous itemized deduction. This can include all unreimbursed expenses from the time you leave home until you return, it’s limited to the amount the federal government generally reimburses employees for travel expenses.

4.  Forgiveness of Decedent’s Tax Liability

This is a bit of a sad tip, but if a member of the U.S. Armed Forces dies in active service in a combat zone or from wounds, disease or other injury received while in a combat zone or from a terrorist or military action, the tax for the year of death and potentially for prior years can be forgiven.

5.  Deferral of Payment

This last tip may be useful come tax payment time but if you are performing military service and you notify the IRS that your ability to pay the income tax has been “materially affected by your military service” then you can defer payment to 180 days after your termination or release from service. If you pay the tax in full before the 180 days, you will not be charged interest or penalty.

It’s great that the IRS made allowances for those who serve, especially in combat zones far away from home. I know that being away from your family and loved ones is hard enough, you don’t need it to be harder.

With these last minute tax tips, the ease of use of TurboTax Military Edition, and the ability to ask TurboTax tax experts your tax question while you file your taxes, free, there’s no reason to delay filing your taxes any longer.  The faster you file, the sooner you will get more money back in your pocket.

Military members who are ranked E-5 and below can file free.

But at what cost? It’s expensive to stay ahead of the electronics race. The running joke about the iPhone (and just about every other type of electronic device) is that “Your gadget is out of date the moment you buy it and walk out of the store.”

Spending all of this hard earned dough to remain king of the electronics mountaintop begs the question – Can I deduct my iPhone 5? Can I write off my new computer or my monthly cell phone service costs? What about my printer, ink cartridges, or any of my electronics . . . can I deduct those expenses from my taxable income?

The short answer is a resounding: Yes! But, as with everything tax related, you have to pay attention to the rules.

Writing Off Your iPhone 5 and Other Mobile Devices

Let’s stay out of the iPhone/Android debate for a moment. No matter which smartphone you’ve chosen, there are two things that every carrier demands; you have to buy a phone and you have to pay for service.

So how do you deduct these expenses? Well, you have to meet the basic criteria that the IRS puts forth when dealing with such issues:

1. you have to itemize your deductions, and
2. you have to use your phone for only your business or place of employment.

The standard deduction doesn’t not allow you to add on your mobile device costs. Sorry, but you’ll have to itemize if you want to deduct mobile device expenses.  TurboTax will help you figure whether you can itemize your deductions or take the standard tax deduction.  You don’t need to know which one to take.

If you’re self employed, you have the ability to deduct all of your cell phone expenses (initial purchase and monthly bill) as long as the phone is used for business purposes – exclusively.

If you aren’t self employed but your phone expenses are required by your employer and you don’t receive reimbursement, you also have the right to deduct all of your cell phone expenses from your taxable income.

Again, to deduct 100% of your cell phone costs, the IRS demands that the phone and service in question be used exclusively for business.

Personal and Business Use

If your phone doesn’t fall into the “exclusively for business” category, don’t worry, the IRS hasn’t completely forgotten about you.

If your new cell phone acts as both your business and personal phone, you are only allowed to deduct the portion used for business from your taxable income. It’s important for you to hang on to your itemized phone bill and receipts to ensure that you’re deducting the right amounts and to keep records of your deduction.

Deducting Other Business Assets

As it turns out, you are able to deduct much more than your cell phone costs. In the same way that you expense your costs from a business trip, the government also allows you to deduct electronics purchases as long as they’re reasonably necessary for your business.

Or as the IRS puts it, you are able to deduct depreciating expenses if those expenses help you to generate income.

Expenses that fit into this category range from new computers, printers, leased equipment, software, monitors, computer peripherals, and so on. Basically, anything that you deem necessary for your business or necessary for you to continue earning income can be deducted.

Just remember to save your receipts and keep good records.

There are two major categories of tax credits that can boost your tax refund—non-refundable and refundable.  A non-refundable tax credit can reduce your total income tax liability (the amount of federal income tax you owe for the entire tax year) to zero – but not beyond.  A refundable tax credit will pay excess beyond your tax liability.

Let’s take an example. Say your income tax liability is $950, but that you qualify for a $1,000 non-refundable credit.  If so, your income tax liability would be wiped down to zero.  However, because it is a non-refundable credit, your tax liability can’t become negative.  On the other hand, if the $1,000 credit you qualified for was refundable, you would be paid by the government $50 in excess of the $950 tax liability.

When you file your taxes in the next couple of weeks, here are five popular refundable and non-refundable tax credits that you may be eligible for:

I want to share some of the biggest ones available right now so you can see which one your family would qualify for and would benefit from the most when you prepare your taxes before the tax deadline.

American Opportunity Credit

Originally called the Hope Credit, the American Opportunity Credit allows those seeking a post-secondary education a tax credit of up to $2,500 per qualifying student. Qualified expenses include tuition and fees.

It has been expanded from covering 2 years to 4 years and now you can claim the expenses you paid for required course materials.

Lifetime Learning Credit

Like the American Opportunity Credit, the Lifetime Learning Credit allows you to receive credit for qualified education expenses you paid.

There is no limit to the number of years you can use the Lifetime Learning Credit, so if you’re taking classes to keep certified, this may be an option for you. Please be aware that you can not claim both the American Opportunity Credit AND Lifetime Learning Credit in the same year.

Deducting Tuition and Fees

If your income doesn’t allow you to take advantage of the American Opportunity or Lifetime Learning Credit, you may still be able to deduct some of your education expenses under the Tuition and Fees Deduction. This deduction can be worth up to $4,000, lowering your taxable income for the year.

To qualify for this deduction, please make sure that you’re claiming this for either yourself, your spouse, or your dependent.

Student Loan Interest Deduction

Just because you finished college doesn’t mean you have no tax breaks. If you have student loans, you may be able to deduct the interest you paid on the loans in 2012. If you meet the income requirements (modified adjusted gross income (MAGI) is less than $75,000 for single filers and less than $155,000 for those married filing jointly) then you may be able to deduct up to $2,500.

Even better, you don’t have to itemize your deductions to claim this on your taxes. Federal student loans would meet the criteria for deducting student loan interest, but a loan from a relative would not.

Thoughts on College and Tax Breaks

There are other tax deductions you may want to look into, including setting up tax advantage accounts for your younger children who won’t be attending college for some years. Using tax software like TurboTax can help you uncover what you’re entitled to and simplify filing your taxes so that you can keep more money in your pocket.

I’d love to hear from you about your family’s take on this topic. If someone in your family is going to college, which tax credits and deductions have you used?

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As is the case with anything tax-related, you’ll have to meet the requirements; and once those requirements are satisfied, you’ll be able to receive an additional tax break for your efforts that was designed to help offset the costs associated with caring for a parent.

Support Means Support

To meet the support requirements necessary to claim your parent as a dependent on your tax return, you must cover more than half of your parent’s support costs – meaning 51% or more of their support costs must be covered by you.

These costs include food, housing or lodging expenses, clothing, and medical services and/or equipment costs.

If support for your parent was given by a group of individuals or family members, you may want to sign a Multiple Support Declaration form which would allow a single person in the group to claim your parent as a dependent, thus giving the tax break to a single person.

Residency and Relationship

The technical term that the IRS uses to meet the relationship requirement for these tax and life situations is “Qualifying Relative”. This means that the person you’re caring for can be your parent, an in-law, or even a grandparent.

However, they must be related to you biologically, by adoption, or through marriage (which would technically be a biological relationship through your spouse).

And guess what?  The IRS has residency requirements as well. To meet the resident requirement, the person you are caring for must meet one of the following:

• Be a legal US Citizen
• Be a US National
• Be a US Resident Alien
• Be a Resident of Canada or Mexico

For foreign, non-US-citizen parents to achieve official US resident status, they must be a recipient of a Green Card issued by the US government or have lived in the US for 183 days during the past tax year.

Social Security and Gross Income

The parent you want to claim as a dependent on your tax return must have a social security number or a tax identification number. Either of these numbers will satisfy the identification requirement for the IRS.

To be allowed to claim your parent as a dependent, your parent’s earned income cannot be more than$3,800 for the 2012 tax year. This means that if your parent earns more than $3,800, you aren’t eligible to claim them as a dependent. Non-taxable income, such as Social Security, does not count toward this amount.

Also, the parent you’re claiming as a dependent cannot file a joint tax return.

More Perks and Requirements

One of the last requirements that needs to be stated is that, if you want to claim your parent as a dependent on your tax return, you yourself cannot be eligible as a dependent on someone else’s tax return. Again, you cannot be claimed as a dependent or eligible as a dependent (even without being claimed) if you plan to claim your parent as a dependent.

Once all of the requirements are met, you’ll be happy to receive an additional $3,800 tax exemption on your return.

You are also allowed to include your parent’s medical expenses when calculating your medical deductions, and you may also be able to claim the Dependent Care Credit if your parent needs assistance while you’re at work or away.

When you answer a few simple questions, TurboTax will figure out whether you are eligible to claim a relative as a dependent.  If you still have questions, you can talk to a TurboTax tax expert while you prepare your tax return.

If you did spring cleaning in 2012 you can also take advantage of this tax benefit and save on your 2012 taxes.  Let’s look at the types of items you might like to donate.

Household Goods such as furniture, appliances, etc, must be in ‘good used condition’ or better, and you must have a written acknowledgement from the charity for any donations of cash or property worth more than $250. Your old set of cutlery, cookware, or dishes may not seem valuable to you, but agencies helping people get off the street or away from an abusive relationship are looking for these things to set people up in a new apartment.

Used Clothing is also in strong demand in nearly every area of the country. Be careful not to over value it, keeping in mind that the IRS tells us “the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value.” TurboTax ItsDeductible will help value your donated items.

If you plan to donate Jewelry or Gems to a qualified charity, perhaps to help them out at their annual auction, you should have a written appraisal from a specialized jewelry appraiser. The lucky guy or gal that bids on your treasure might have a donation of his or her own, but only to the extent their winning bid exceeded the appraised value of your donated jewelry.

Donations of art valued at over $5,000 must be supported by a written appraisal which you should keep with your records. If over $20,000, the IRS would like to see that appraisal attached to your return along with an 8 x 10 inch color picture of the donated art.

Cars and Boats are valued using pricing guides for private party sales, and should be reduced if the car has any damage or excess wear. If the donated car is sold by the charity, you can only deduct what the charity sold it for. What the charity does with the car may impact the deduction you can take, Publication 526 offers a comprehensive set of guidelines for how to value your deduction.

Stocks and Bonds can also be donated directly to charity and there’s a bit of a double bonus in doing so. Say you’ve owned a stock for a long time and its value is many times its original price. By donating the stock to a charity, you get the tax deduction, based on your marginal rate, but you also get to avoid the capital gain on those shares. For those who have significant donations they are making each year, this is a nice strategy to maximize your charitable giving.

I shouldn’t miss mentioning that The American Taxpayer Relief Act of 2012 (what congress passed to avoid the fiscal cliff) extended the Qualified Charitable Distribution for 2013. This means that if you are 70-1/2 or older and taking Required Minimum Distributions (RMD) from your IRA, you can direct the custodian, the bank or broker, to send funds directly to a charity of your choosing. It’s consider part of your RMD, but isn’t taxed. For those who don’t itemize, it has the effect of saving you the same on your taxes as if it were a deduction included on your return. Even if you do itemize, it may still provide a bit of a benefit by not appearing as adjusted gross income.

I hope these Spring Cleaning ideas can help make some room in your house and lighten your tax bill next year.  Don’t forget, if you did spring cleaning in 2012 you can take advantage of these tax deductions when you file your 2012 taxes.  TurboTax will ask you the proper questions so that you can keep more of your hard-earned money.

Mortgage Interest Deduction

That big fat mortgage payment you now have to pay every month has an upside. The interest portion of every payment is tax deductible.  Keep in mind that, at the beginning of your mortgage, most of your payment is interest, meaning that the overwhelming majority of your payment is tax deductible.

Real Estate Tax Deduction

Every dollar you pay in real estate taxes is deductible.  While it’s never fun to learn that your property taxes have gone up again, at least you will be able to take some solace in knowing your tax deductions (and your resulting income tax savings) will increase at the same rate.

Charitable Donation Deduction

While the charitable donation deduction might seem unrelated to a home purchase, this is income taxes we’re talking about.  Before you purchased your home, you may not have had enough tax deductions to itemize your deductions.

Why?  Since your standard deduction was greater than your itemized deductions, you did not benefit from any of the itemized deductions you could have otherwise taken.  But when you became a homeowner, the mortgage interest and real estate taxes alone often make it so that you will be able to itemize and you are now eligible for additional tax deductions. The most common of these is the charitable donation deduction. So, if you tithe at church or give clothes to the Vietnam Veterans, you will now also receive a tax benefit from doing so.

Other Considerations for First Time Home Buyers

Save your closing form (HUD).  When you file your tax return for the first time after buying a home, additional expenses incurred on your HUD may be deductible, including prepaid interest (points) you pay at closing.

Save all of your home improvement receipts.  You are likely to sell your home one day.  Most home sales do not result in income tax.  However, it is possible if you move very quickly or make a very big profit. To lessen the odds you will owe capital gains taxes on the sale of your home, save your receipts!

Welcome to the world of home ownership. It can be wonderful and expensive. Make sure you take advantage of every opportunity to keep your costs in line.  Start with taking maximum advantage of the tax deductions available to you.

Don’t worry about knowing all of these tax deductions, TurboTax will ask you simple questions, and give you the tax deductions you’re eligible for.  If you have questions, only TurboTax lets you talk to CPAs, Enrolled Agents, and tax attorneys while you prepare your tax return, free.

The Fiscal Cliff is behind us, an agreement to avoid the cliff was codified in the American Taxpayer Relief Act (ATRA). Among the golden nuggets within ATRA were the extensions of particular tax credits relating to Energy-Efficient Improvements to your home to help you save more of your hard-earned money.

First, let’s look at the improvements that qualify, starting with the items that fall under the Residential Energy Efficient Property Credit:

• Solar Electric (i.e. Photovoltaic Panels)
• Solar Water Heating
• Small Wind Energy (Windmills)
• Geothermal Heat Pumps.
• Fuel Cells

Expenses for the above items are applicable to either your main home or your vacation home, with fuel cell being the single exception, main home only.  In addition fuel cells are limited to 30% of cost up to $500.

A 30% credit is available for any or all of the above improvements whether they are added to an existing home or at the time of construction of a new home. Keep in mind the difference between a Tax Credit and a Tax Deduction. Put simply, the tax credit is like a cash discount on the item purchased. Drop $10,000 on a solar panel installation, and Uncle Sam hands you back $3000 tax credit. Additional rebates are available on a state-by-state basis. To learn more about the benefits your state offers, the Database of State Incentives for Renewables & Efficiency, funded by the Department of Energy, will help you find the details. These credits are currently scheduled to be available through 2016.

The next group of improvements fall under The Nonbusiness Energy Property Credit. This tax credit is more limited than the Residential Energy Efficient Property Credit. It’s capped at a $500 credit total for all years from 2005 through 2013. It includes expenses for the following qualified energy efficiency improvements:

• Insulation or any system designed to reduce heat loss
• Exterior Doors
• A metal roof designed to reflect heat
• Exterior Windows

The next category of credit worthy items are residential energy property costs. These include:

• Central Air Conditioners
• Gas, propane, or oil furnaces and qualified natural gas, propane, or hot water boilers.
• Advanced main circulating fans for the systems included in this group.

You don’t need to worry about which types of purchases apply to a given credit.  TurboTax figures out which tax credit your eligible for. Back in 2010, I was finishing my basement, and part of the process was to have professionals install solid foam insulation against the foundation.

Of course, I had been saving all my receipts for material as I went along as this would be added to my home’s cost basis, but what a pleasant surprise I had while working on my return for the year. TurboTax asked me if I had these expenses and gave me the appropriate tax credit and put $1500 back in my pocket.

Daylight Savings Time is here and you can save money by using less electricity, but if you made energy efficient improvements don’t forget to have your receipts ready when you prepare your taxes so you can take these tax credits and save more green this tax season.

The Non-business Energy Property Credits are scheduled to last through 2013, so if you’ve not taken advantage of these and used up your potential credits, you might consider doing so this year. You’ll get a bit of a tax refund and the chance to save on your energy bills in the years to come.

As taxpayers, we are always looking for ways to maximize our income. The Internal Revenue Service (IRS) offers certain tax credits to help us with our expenses and savings surrounding two financial issues that are of great importance to our future: our education and retirement. These are some of the credits for which you may qualify and be one step closer to your financial success.

Education Tax Credits

If you, your spouse or one of your dependents paid for higher education or post-secondary expenses in 2012, you may qualify for one of these education tax credits: The American Opportunity Tax Credit or the Lifetime Learning Credit. These credits are available to help you pay for tuition or other related school expenses, as long as you didn’t pay for them with tax-exempt scholarships. TurboTax will help you choose the credit that helps you keep more of your money, but you cannot claim both of them.

The American Opportunity Tax Credit covers expenses during the first four years of post-secondary education. To qualify, the student must be studying towards a degree; enrolled in school at least part-time during the academic period; and not have been convicted of any drug-related offense.

The Lifetime Learning Credit is not as generous as the American Opportunity Tax Credit, but it is available for students who paid for any expenses related to qualified post-secondary education, whether it was a four-year program or not. Similar to the American Opportunity Tax Credit, this credit can be claimed for tuition and enrollment expenses. You can also claim expenses for required books or equipment if you paid the school directly for them.

Some expenses that are not eligible for these credits include expenses related to housing, insurance, transportation, medical expenses and others that are not directly related to the completion of any type of post-secondary studies. TurboTax can help you determine which credit will provide you with more benefits and which expenses you can include when claiming the credit.

Saver’s Credit

If you have  followed the wise advice of saving for your retirement and you have low or moderate income, the IRS could reward you with up to $1,000 ($2,000 if married and filing jointly) to help you save for your future. Contributions to investment accounts for retirement such as an IRA, Roth IRA, 401 401(k), 403(b), 457(b) and other voluntary contributions could help you meet the requirements to receive this credit, including:

• You must be at least 18 years old
• You cannot be claimed as a dependent by someone else
• You cannot be a full-time student
• You can claim up to 10%, 20% or 50% for the first $2,000 you saved
• The credit amount depends on your adjusted gross income, which cannot be more than:
  • $28,750 if you file as single, married filing separately, or widowed
  • $43,125 if you file as the head of a family
  • $57,500 if you file as married filing jointly

If you contributed any amount towards your retirement or have education expenses in 2012, TurboTax will help you determine if you qualify for these tax credits by asking you a series of simple questions while filing your taxes so that you can keep more of your hard-earned money.

But what can you deduct? What amount of your medical expenses are tax deductible? Do you have to show proof of the expenses that you’re claiming as deductions? Whose medical bills are able to be deducted?

These are some very common questions about medical expenses, so let’s just dive right in.

You Can Deduct Medical Expenses

More than a few people are surprised to learn that a portion of the cost of their medical and dental expenses can be subtracted, or deducted, from their adjusted gross income. However, on your 2012 taxes, only medical and dental expenses that meet the government’s minimum required amount, which is anything above 7 ½ percent of your adjusted gross income (AGI), are eligible.

In other words, if you’re medical expenses aren’t equal to or greater than 7 and a half percent of your income, you can’t claim them as tax deductions.

Of course, these expenses can only be deducted from your income if you itemize your tax deductions instead of taking the standard deduction.

Whose Expenses Can Be Deducted?

Whether you’re a first-timer in the medical deductions arena or a seasoned veteran, it’s important to know exactly whose medical expenses can be deducted from your income.

Although almost everyone’s life (and therefore tax) situation is unique, you can somewhat generalize the rules about medical and dental deductions. Here’s the low-down: you can deduct your medical and dental expenses, those of your spouse, or the expenses of your dependent’s – if you choose to itemize.

If you’re not sure about itemizing your deductions, TurboTax will figure out which choice benefits you best – itemize or take the standard deduction.

Exactly Which Medical and Dental Expenses Can I Deduct?

The government has an enormous list of qualifying medical and dental expenses that they have ruled as eligible for deduction on your income taxes. For a full list of every piece of information dealing with deductible medical expenses, see IRS Publication 502.

For time’s sake, here are a few of the most common expenses (and some commonly overlooked expenses) that are deductible.

• Diagnosis and Cures
• Annual Physical Exams
• Medicine, Treatment and Prevention
• Dental Treatments
• Medical Equipment, Supplies and Diagnosis Devices
• Ambulance and Other Medical Professional Transportation
• Travel expenses to and from treatment
• Insurance payments
• Chiropractor
• Psychologist
• Physical Therapy

Medical Expenses that Aren’t Deductible

The IRS updates the list of medical expense deductions quite frequently, from a tax perspective, so it’s important to know not only what is considered deductible, but what isn’t.

A few expenses that may be medical-related but aren’t as of yet deductible, according to Uncle Sam, are:

• Elective cosmetic surgery
• Medicine that isn’t FDA approved
• Expenses related to a funeral
• Medicare tax payments (for the self-employment tax)

1.  First, combat pay is not subject to Federal income tax. Combat Zones are defined by the federal government under executive order, and currently include Arabian Peninsula Areas, Kosovo area, and Afghanistan.

The lack of any family income could disqualify civilians from receiving any Earned Income Tax Credit (EITC). Even though the combat pay received isn’t taxable, it may be included as income for purposes of qualifying for the EITC. The EITC is based on income and the number of children you have, and may be as much as $5,891 for a family with three or more children. This credit is refundable meaning even if you have no tax at all for the year, you can still receive this credit.

2.  The Roth Thrift Savings Plan was introduced this year providing an excellent alternative to the standard pretax plan that had rules similar to the private sector’s 401(k). As combat pay isn’t taxed, the ability to put some of this money into a Roth designated retirement plan will provide you and your family with a tax free benefit when you retire.

3.  You may have taken a withdrawal from an IRA, 401(k), 403(b), or other qualified plan. If so, the 10% penalty for early distribution will not apply, only the tax that would normally be due for the non-taxed portion of the withdrawal.

If this is your situation, I’m happy to share with you a unique opportunity, the ability to make up this withdrawal. You have up to two years after your active duty ends and are permitted to deposit these returned funds to an IRA even if it was taken from a 401(k) or other qualified plan. This transaction is reported on form 8606. A very nice, yet little-known benefit you might use.

4.  For moving expenses to be a deduction for civilians, there are a number of requirements to meet. Not so for those on active duty. You are able to deduct the cost of moves from your home to your first post, moves from one permanent post of duty to another, and finally, for the move home within a year of your active duty coming to an end. Eligible expenses include the cost of moving household goods and travel costs for you and the members of your household. This includes your spouse and dependents.

5.  If you are selling your home, the current test to take advantage of the $250K (Single)/$500K (Married Filing Joint) exclusion of gains is that you must have lived in the house for two of the prior five years. Members of the armed forces are permitted to suspend the 5-year look-back for as many as ten years. In effect, if you qualify for the two/five rule, the time you are serving will not let the five years get behind you.

6.  Last I’d like to share that TurboTax has introduced TurboTax Military Edition. It’s free for those at a pay grade of E-1 to E-5. It will help you capture the tax credits and deductions that are offered to the men and women who have served.

Like almost everything related to your income, expect a change in your job to have an impact on your tax situation. And when it comes to taxes, the ‘how and why’ of your job transition has quite a bit of weight as well. Believe it or not, the IRS cares about why you’re leaving your current job and how you’re looking for your new job.

Since the IRS cares so much (and since the answers have a lot to do with how much or how little you may owe come April 15), it’s a good idea to be as prepared and read up on a few different scenarios below.

Severance and the IRS

Whatever walk of life you come from, the word severance tends to carry a negative connotation. It’s usually paired with being let go, laid off, or forced into retirement.

No matter what reason for your severance pay, you need to know that the IRS wants their cut.

According to Publication 525, the IRS categorizes severance pay as any form of payment “for the cancellation of your employment contract”. And this severance pay must be included as part of your income when you file your tax paperwork.

You do have the choice to reduce the amount of severance pay you receive if you decide to accept outplacement services such as learning how to write a résumé or conducting a successful interview. In this case, you must still include the original amount of severance you would have received as part of your income, but you have the option to deduct the value of the outplacement services from your overall income.

Finding Yourself Without a Job (i.e. Unemployment)

For many people who experience the sudden loss of a job, unemployment benefits are vital to keeping food on the table and paying the bills. Unfortunately, most people aren’t knowledgeable about how unemployment benefits and compensation are taxed until they experience it first hand.

Why is this important to know? You may not realize unemployment compensation is added to any other income you earned and it is still taxable.

Job Searches and Deductions

One of the few bright lights at the end of the tax tunnel is the ability to deduct job search expenses from your taxes. In many instances, you can deduct expenses for job search even if you didn’t get that particular job.

Job search expenses that are deductible range from traveling to and from interviews, resume preparation and printing, professional job placement resources, and even postage.

TurboTax is up to date with all of these tax laws and will ask you questions specific to your tax situation so that you get every tax deduction and credit you’re eligible for.  Have a question?  Only TurboTax lets you talk to a tax expert whose a CPA, IRS enrolled agent, or tax attorney, free.

Points – You may know that points you pay on a mortgage to buy a home are deductible. On a refinance, however, the points are taken over the life of the loan. What’s often missed on a subsequent refinance, you should then take the remaining dollar value of points from the prior refinance.

Rent – Can’t be deducted on your Federal Tax Return, but a number of states allow for a partial deduction.

State Sales Tax – This deduction has been available for only a few years, and is most welcome to those who live in a state with no income tax. The IRS allows you to choose between an amount based on income, or actual sales tax paid, which can be substantial if you’ve made some high ticket purchases.

Charitable Donations – Did you know that if you volunteer for a charity that, in addition to cash or goods donationated, you can deduct 14 cents per mile that you drive to help the charity out. For those who support a food bank with weekly visits, for example, this deduction can add up over the year. Be sure to keep notes for the dates you volunteered and the miles driven each day.

Are you a Teacher? Keep your receipts if you’ve purchased any supplies for your classroom. You can deduct up to $250 even for those who don’t itemize.

Medical Expenses- Tax deductions to the extent they exceed 7.5% of your Adjusted Gross Income (AGI). Some items that are easily missed: mileage – a deduction of 23 cents per mile for medical purposes. For those who have frequent visit to the doctor or clinic, this can add up. Equipment for disabled individuals, including items such as crutches, walkers, and orthopedic shoes. Any changes you make to your home to accommodate an elderly or disabled person is deductible less any value such renovation adds to the house.

Energy Saving Home Improvements – a number of improvements made in 2012 count toward the Residential Energy credit. Included are such items as energy efficient windows, doors, and roof. Also on the list is insulation, and new heating or central air conditioning. We’ll discuss this in greater detail in an upcoming article, so you’ll be an expert on this topic.

Credit for Retirement Savings Contribution – Couples filing jointly with an AGI up to $57,500, or Singles up to $28,750 can receive a credit up to $1,000 per person if they make a contribution to an IRA account during the year. The amount varies based on income, and the credit itself can be as high as 50%, a great motivation for lower income earners to find spare cash to fund their IRA.

TurboTax will ask you the necessary questions so that you get these tax deductions and credits if you’re eligible.  If you have questions, remember only TurboTax allows you to speak to tax experts who are CPAs, IRS enrolled agents, and tax attorneys.

Como contribuyentes, siempre tratamos de buscar la forma de hacer que nuestro salario nos rinda al máximo.  El Servicio de Impuestos Internos (IRS) tiene algunos créditos que nos podría ayudar con los gastos y los ahorros de dos temas financieros de mucha importancia para nuestro futuro: Educación y Jubilación.  Aquí están algunos de los créditos de los cuales podrías calificar y estar un paso más cerca de tu éxito financiero:

Créditos Tributarios por Estudios

Si tú, tu esposo/a, o alguno de tus dependientes pagaron este año por gastos  de educación superior o post-secundaria, podrían calificar para recibir uno de los créditos tributarios por estudios disponibles en el 2012: el Crédito Tributario de Oportunidad para los Estadounidenses (American Opportunity Tax Credit) o el Crédito Vitalicio por Aprendizaje (Lifetime Learning Credit).  Estos créditos están disponibles para ayudar a pagar los gastos de matriculación y otros gastos relacionados; siempre y cuando no sean pagados por medio de becas libres de impuestos.  TurboTax te ayudara a el crédito que te ayude a recibir el mayor beneficio, pero no puedes elegirlos los dos.

El Crédito Tributario de Oportunidad para los Estadounidenses, o American Opportunity Tax  Credit, cubre gastos por los primeros cuatro años de educación post-secundaria.  Algunas reglas que hay que tomar en cuenta es que el estudiante debería de estar cursando estudios hacia una licenciatura, matriculado al menos medio tiempo durante el periodo académico, y no haber sido condenado a algún delito agravado por drogas.

El Crédito Vitalicio por Aprendizaje no es tan generoso como el anterior, pero está disponible para estudiantes  que pagaron cualquier tipo de gastos por educación post-secundaria elegible (no solo para personas cursando una licenciatura de 4 años).   Al igual que el Crédito Tributario de Oportunidad para los Estadounidenses, este crédito se puede reclamar por gastos de matriculación o inscripción.  También puedes reclamar gastos de libros o equipos requeridos solo si son pagados directamente a la institución.

Algunos gastos que no llenan los requisitos para estos créditos son gastos por hospedaje, seguros, transportación, gastos médicos, y otros gastos que no estén directamente relacionados para completar algún tipo de estudios post-secundario.  TurboTax te ayudara a reconocer el crédito que te proveerá el mayor beneficio y cuales gastos pueden ser incluidos en la reclamación del crédito.

Créditos por Aportaciones a Cuentas de Ahorro para la Jubilacion (Saver’s Credit)

Si has seguido los sabios consejos de ahorrar para tu jubilación, y tienes bajos ingresos o moderados, el IRS podría premiarte con hasta $1,000 ($2,000 si son casados y llenan juntos) por ahorrar para tu futuro.  Contribuciones hacia cuentas de inversiones para la jubilación como las cuentas IRA, Roth IRA, 401(k), 403(b), 457(b) y demás contribuciones voluntarias pueden cumplir con los requisitos para recibir el crédito:

• Mayor de 18 años
• No puedes ser dependiente de otra persona
• No puedes ser un estudiante a tiempo completo
• Puedes reclamar hasta el 10%, 20%, o 50% de los primeros $2,000 ahorrados.
• El crédito varía de acuerdo a tus ingresos brutos ajustados, y no pueden ser mas de:
  • $28,750 si llenas tu planilla como soltero, casados llenando separados, o viudo/a
  • $43,125 si llenas tu planilla como cabeza de familia
  • $57,500 si llenas tu planilla como casados llenando juntos.

Si contribuyes alguna cantidad hacia tu retiro o tienes gastos de educación, TurboTax te ayudara con una serie de simples preguntas para comprobar si calificas para reclamar estos créditos tributarios en tu planilla de impuestos. Así mantendrás en tu bolsillo mas del dinero que te costo tanto ganar.

How Much is the Educator Expense Deduction?

The maximum Educator Expense Deduction is $250 per individual.  In the event both spouses are educators and each spends at least $250 on qualified educator expenses, the maximum deduction on their joint return is $500.

What Expenses Qualify for the Educator Expense Deduction?

The IRS has determined that the following expenses qualify for the deduction:

• supplies
• computer equipment (including related software and services)
• other equipment, and
• supplementary materials that you use in the classroom

Keep in mind that health and physical education teachers who incur educator expenses must use them in athletic education to qualify for the deduction.  In addition, all expenses must be unreimbursed to be deductible (If you’re not out-of-pocket due to the expenditure, you didn’t really incur the expense).

Who Qualifies for the Educator Expense Deduction?

Not surprisingly, you must be an educator to be able to take the deduction.  This means you can be a teacher, instructor, an aid, or pretty much anyone who spends 900 hours or more per year in a elementary or secondary school.  Principals qualify too, but home school educators do not.

In addition, you must file either file a Form 1040 or a Form 1040A to deduct your educator expenses.  While some tax deductions require taxpayers to itemize in order to benefit, the Educator Expense Deduction does not. As a result, every taxpayer with the bona fide educator expenses described above will save money on their taxes.

TurboTax walks you through the appropriate tax questions to make sure you get this tax deduction if you’re eligible, so you can keep more of your hard-earned money.  If you still have questions, only TurboTax lets you talk to CPAs, IRS enrolled agents, or tax attorneys while you prepare your taxes, free.

What is the state and local sales tax deduction?

Many people are familiar with the fact that state and local tax payments, including real estate tax, property tax, and state income tax are tax deductible.  A few years ago, Congress added sales tax to the list of deductible state and local taxes.  However, it did so with a bit of a hitch: taxpayers must choose between deducting state and local income tax or state and local sales tax-not both.  Taking the State and Local Sales Tax Deduction may be beneficial to you if you live in a state that doesn’t collect state income taxes or if you made large purchases and paid substantial local sales tax.

How do I calculate my state and local sales tax deduction?

To determine your state and local sales tax deduction, you can keep all of your receipts during the year and then, come tax time, add the sales taxes collected on all of them.  Even if you don’t have all of the receipts TurboTax will help you estimate the value of your state and local sales tax.

If you have state income taxes that were withheld from your paycheck or that you paid and state and local sales taxes, TurboTax will automatically select the higher deduction for you, ensuring you keep more money in your pocket.

What else should I consider when thinking about the state and local sales tax deduction?

If you have relatively low income compared to spending or live in a state without an income tax, be sure to deduct your state and local sales tax deduction.  TurboTax will walk you through the necessary questions and help you get this tax deduction if you’re eligible.

Dependency exemption. In 2012, you can claim a personal exemption deduction of $3,800 for each child and other dependent, and for 2013 that increases to $3,900. Those exemptions reduce the portion of your income that is subject to federal tax. If you are in the 15% bracket this will save you $570 for 2012, and at 25%, $950 in 2012. The higher your tax bracket, the more each dependency exemption saves you.

Child Tax Credit. You may also be eligible for a tax credit, which is even better than a deduction, since it reduces your taxes dollar for dollar. The Child Tax Credit is an additional $1,000 credit you may be able to claim for children under 17. For married couples with income over $110,000 or $75,000 for a single parent, the credit phases out.

Child and Dependent Care Credit.  Child care is expensive, but Uncle Sam can help you out with the cost. If you are working or actively seeking work and you pay child care for your dependent who is under age 13, you can claim the Child and Dependent Care Credit.

This credit is a dollar for dollar reduction of your taxes, based on your child care expenses up to 35% of $3,000 for one child or $6,000 for two or more children. The credit ranges from 20 to 35 percent of your child-care expenses, depending on your income.  Nursery school, private kindergarten, after school programs and day care are all qualifying expenses.

Earned Income Tax Credit. There’s a special credit available if your wages and self-employment income fall below a certain level. How much you can earn and qualify for the credit depends on how many dependent children you have.

For 2012, if you have three or more children, you can earn up to $45,060 and qualify. With just two children, that drops to $41,952. Only one child, your earnings and adjusted gross income can’t top $36,920. The refundable tax credit you can receive ranges from a maximum of $5,891 if you have three children, to $475 if you have no children. Unlike other tax credits, the earned income credit is refundable, so if the credit is greater than the tax you owe, the IRS will send you the difference.

So next time the kids are driving you crazy, remember the tax savings and give them a big hug instead.

Don’t forget that TurboTax will help you get all of the tax credits and deductions you’re eligible for so you keep all of your hard-earned money.