Get Refund Lucky with These Top 8 Tax Deductions and Credits – DON’T USE THIS VERSION

Tax season can be a whirlwind of paper and mail.  If you rush around and do your taxes at the last minute don’t rely on luck to get your biggest tax refund.  You may leave something out.  Fortunately, with TurboTax you will be reminded of tax deductions and credits you didn’t even know about, but here are 8 of the most commonly overlooked and forgotten tax deductions by those who may not use TurboTax.

1. State and Local Sales Tax Deduction.

You are permitted to deduct either the state income tax paid or the state and local sales tax paid. You can choose either but if you live in a state without a state income tax, it’s a no brainer. You would deduct the state sales tax you paid. The break had expired at the end of 2014 but it was made permanent last year – so you are free to choose the one that gives you the biggest tax deduction.  TurboTax will chose the option that gives you the biggest tax deduction.

2. Charitable Contributions. 

If you made any donations, no matter how small, remember to deduct them. It’s easy to forget the smaller amounts you contributed to various walks, races, and ice bucket challenges but they add up quickly. Cash contributions will need a receipt as supporting documentation so remember to keep them throughout the year. If your contribution is greater than $250, you will also need a form of acknowledgement from the charity. 

You can’t deduct the value of your time when you volunteer but you can deduct your travel at 14 cents per mile as well as any parking and tolls you paid. Keep a good record of your mileage, including the date, mileage, and purpose – as well as receipts for tolls and parking.  TurboTax ItsDeductible can track your mileage for trips to volunteer for you.

3. Job Hunting Expenses. 

If you looked for a new job in your current occupation, many of those expenses can be deducted. You can deduct fees paid to an employment or outplacement agency as well what you spend preparing and mailing your resume to companies. If you traveled, those expenses are deductible as long as the primary goal of the trip was to look for a new job. 

If you are looking for a job in a different occupation, then your expenses are not deductible. If there was a “substantial break” between the end of your last job and your search, you cannot deduct the expenses. If you are looking for a job for the first time, then you cannot deduct the expenses.

4. Work-related Moving Expenses. 

Did you move because of your job? Then you might be able to deduct the expenses of moving! You have to pass a few tests, the Distance Test and the Time Test, in order for the expenses to qualify. The Distance Test says that your new job has to be 50 miles further away than your old job was from your old home. If it is, then the move meets the Distance Test. The Time Test says that you have to work full time for 39 weeks in the first year after you move. Meet both and you can deduct.

5. Child Care and Dependent Care Expenses. 

If you have children under 13 who qualify as dependents, you can deduct what you pay to their child care provider on your taxes. This includes, but isn’t limited to, before and after school care programs, day care, and day camps. Overnight and sleepover camps are not eligible. This credit also applies to any non-child dependents, however you will have to show they are physically or mentally incapable of self-care and are also your dependents. 

There are a few other qualifications, such as you have to have earned income, you must have paid for the care so that you could work or look for work, and you must provide the name, address, and EIN or social security number of the provider.

6. Student Loan Interest Paid by Mom and Dad.

In the past, if parents paid back a student loan incurred by their children, no one got a tax break. To get a deduction, the law said that you had to be both liable for the debt and actually pay it yourself. But now there’s an exception. If Mom and Dad pay back the student loan incurred by their children, the IRS treats it as though they gave the money to their child, who then paid the debt. So a child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by Mom and Dad.

7. Earned Income Tax Credit (EITC).

Millions of lower-income people miss out on this every year. However, 25% of taxpayers who are eligible for the Earned Income Tax Credit fail to claim it, according to the IRS. The EITC is a refundable tax credit – not a deduction – ranging from $503 to $6,242 for 2015. The credit is designed to supplement wages for low-to-moderate income workers. But the credit doesn’t just apply to lower income people. To get a refund from the EITC you must file a tax return, even if you don’t owe any taxes

8. Reinvested Dividends.

This isn’t really a tax deduction, but it is a subtraction that can save you a lot of money. If, like most investors, you have mutual fund dividends automatically invested in extra shares, remember that each reinvestment increases your “tax basis” in the fund. That, in turn, reduces the amount of taxable capital gain (or increases the tax-saving loss) when you sell your shares.

Forgetting to include the reinvested dividends in your cost basis—which you subtract from the proceeds of sale to determine your gain—means overpaying your taxes. TurboTax Premier and Home & Business tax preparation solutions include a very cool tool—Cost Basis Lookup—that will figure your basis for you and make sure you get credit for every dime of reinvested dividends.

Good luck this tax season!

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