Billions of dollars are left behind every year by people who prepare their own taxes, often because they fail to take advantage of all the tax deductions available to them. While I believe that most of us can do our own taxes and not leave our money on the table, it’s imperative to prepare now for the tax return deadline which is April 18th this year (the 15th is a Friday and this year’s deadline has been extended to Monday the 18th). In Maine and Massachusetts it’s the 19th due to Patriots day.
To help you with your 2015 tax returns, don’t skip this important list. While I’m not a tax professional, you can always research these and other tax deductions at IRS.gov. Remember, if you have difficulty or your return is more complex than you can handle, see an accountant or check out the many free options either online or in your own community.
Every year there some changes in tax law that you may not be aware of when you sit down to figure out your return. This year there are a few changes again for 2015 tax returns. The highlights for 2015 include:
- If you received a government health subsidy in 2015, you may have to repay some or all of it back in 2016.
- The penalty for not having health insurance increased for 2015 from 2014.
- The FBAR (Foreign Bank and Financial Accounts) reporting tables changed this year.
- There are changes in the filing dates for business and partnership returns in 2015.
- In 2015 rules for IRA turnovers have changed. You are now only allowed one IRA to IRA rollover every 12 months (with a few exceptions). However, you can still do as many “direct” IRA rollovers between trustees as in the past.
If you itemize your tax deductions (not using standard deductions), here’s a list of the 33 most overlooked deductions that may apply to you and save you money. If doing your return from an online service (which I recommend), you should see these pop up and highlighted to see if they apply to you.
33 Most Overlooked Tax Deductions
Tax deductions reduce the amount of your taxable income. Before filing your return, check to see whether the standard deductions or itemizing your deductions is most beneficial to your situation
- Premiums on taxable bonds
- Appraisal fees for your charitable donations
- Dry cleaning services for travel
- Depreciation of your home computer if you use it to produce income (including managing your investments)
- Contributions to your state disability funds
- Estate taxes with respect to a decedent
- 50% of your self-employment taxes
- Foreign taxes paid
- Home improvements for energy savings
- Investment advisory fees
- Lead paint removal costs
- Legal fees to collect alimony
- Long term care insurance premiums
- Margin account interest expense
- Mortgage late fees paid
- Health and dental insurance premiums
- Seller paid points on mortgages and refinances
- Special equipment for the disabled
- Special schools for medical care education
- Theft or embezzlement losses
- Worthless stocks or securities
- Gambling losses up to the amount of your fully taxable winnings
- Airline booking, baggage and trip change charges for self-employed business travelers
- State sales taxes paid (from table based on your income and/or actual from records)
- Job hunting costs and moving expenses when relocating for your first job (relocation expenses for subsequent jobs qualify too, but tend not to be overlooked)
- Estate sales taxes
- Military reservists travel expenses
- Alcohol and drug treatment costs
- Waiver of tax penalties for first year retirees
- Student loan interest even if paid by your parents (as long as your no longer a dependent) of up to $2,500 per year
- State income taxes you paid last year
- Jury pay you gave to your employer
Most Overlooked Tax Credits
Tax credits, as opposed to deductions, are applied directly against your tax liability, rather than your income.
- American Opportunity Credit (replaced the Hope Credit) up to $2,500
- Lifetime Learning Credit For Adults up to $2,000 (even retirees can get this)
- Earned Income Credit (EIC) – even if you pay no taxes you can get this credit depending on your income and marital status of up to $6,242 in 2015!
- Retirement Savers Credit – designed to help lower and middle class tax payers in addition to a tax deduction for contributing to you IRA or other retirement plan, you can also get a credit for it as well of up to $1,000 for an individual or $2,000 per couple depending on qualifications based on your adjusted gross income
Remember the famous saying:
“It’s not what you earn that matters, it’s what you keep!”
Have you begun to organize your tax documents yet? Tax returns can now be processed and the sooner you do the sooner you will get your refund processed. Remember, the goal isn’t to get a huge refund in April while lending Uncle Sam your money tax free all year long. As you prepare, think about any adjustment you can make to your tax withholding (W-4) to try and be more accurate in 2016.
What tax strategies are you considering to save for your taxes for 2015?
Image courtesy of everydayplus at freedigitalphotos.net (with changes)