April brings showers, flowers…and taxes! Although we are not near the tax deadline, now is a good time to start thinking about tax deductible expenses so you can start gathering receipts for expenses you paid so you can make an impact on your taxes and increase your refund or lower the amount of taxes you owe.
Here are 10 money-saving tax deductions (and credits) to keep in mind when you start gathering your receipts for tax-time.
- Education Expenses: Tuition is deductible for full-time students, but even casual learners can get a tax credit. The Lifetime Learning Credit of 20% of up to $10,000 of tuition and fees is available even if you aren’t pursuing a degree.
- Camp for Your Kids: You may be entitled to the Child and Dependent Care Credit if your children are under the age of 13, and you took them to a before and after school care program, daycare, or day camp so you can work. Overnight and sleepover camps are not eligible.
- Health Insurance: If you are self-employed, you can take a deduction for the health insurance premiums you pay for yourself and your family. If you are not self-employed, health insurance premiums paid after taxes, along with your other medical expenses, are tax deductible if they exceed 7.5% of your income and you itemize your deductions.
- 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 or races, but they add up quickly. 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. TurboTax ItsDeductible will help you accurately value and track your charitable contributions year round and then transfer your deductible contributions to your TurboTax return.
- Sales and Local Tax Deduction: You are permitted to deduct either the state income tax paid or the state sales tax paid if you itemize your tax deductions. 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. You are free to choose the one that gives you the biggest tax deduction. TurboTax will choose the option that gives you the biggest tax deduction.
- Home Office: If you use part of your home regularly and exclusively to perform administrative or managerial activities for your business, you can claim a home office deduction for a portion of utilities, rent, mortgage interest, depreciation, cleaning and the like based on the square footage of your home used for your business.
- Personal Bad Debts: If your best friend borrows $10,000 from you and then skips town, you can deduct up to $3,000 of this non-business bad debt as a short-term capital loss on your tax return in the year the debt becomes uncollectible.
- Points Paid on your Home Loan: If you paid points when you bought a home, they are deductible in that year. Points paid to refinance a loan must be written off over the length of the loan. If you refinance again, don’t forget to write off the remaining points in the year you refinance.
- Mileage Expenses: If you use your vehicle for business, whether you are self-employed or an employee, you can deduct your mileage (54.5 cents per mile in 2018). If you work at more than one job, the cost of traveling between job locations is tax deductible as well.
- Medical Costs: The cost of exercise equipment or purchasing and maintaining a spa or swimming pool may be tax deductible as medical expenses if your doctor recommends them to mitigate a medical condition.
TurboTax will ask you simple questions about your life to help you claim the tax deductions and credits you’re eligible for based on your entries. TurboTax checks for more than 350 deductions and credits so that you can keep more money in your pocket!
If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. A TurboTax Live CPA or Enrolled Agent can even review, sign, and file your tax return.