Top 8 Deductions that Could Save You Money on Your Taxes
If you saw a $100 bill lying on the sidewalk, would you walk by without picking it up? Probably not. Yet, every year, you probably skip past a number of tax deductions and credits that could potentially save you hundreds, possibly even thousands of dollars, including the following eight.
Increase Your Tax Deductions Tip 1: Health Plan Premiums
If you are self-employed and pay for your own health insurance, you may be eligible for an adjustment to your income known as the self-employed health insurance deduction. And even if you aren't self-employed, there are some instances where you may be able to write off some of the money you've paid out in premiums. For instance, if the business you work for only pays a portion of your premiums, you may be able to deduct some of the money you paid out of your own pocket. Just be careful, though. You'll need to make sure that your employer doesn't already deduct your share of the premiums out of your pre-tax earnings.
Increase Your Tax Deductions Tip 2: Other Medical Costs
You may be able to deduct some of your out-of-pocket medical and dental expenses if you will be itemizing your deductions on a Form 1040, Schedule A. And it's not just fee payments to traditional doctors that you can claim. You can also itemize payments that you've paid to other types of doctors, including acupuncturists and chiropractors. In addition, you may also be able to claim your payments for prescription medication, such as insulin, and even for medical aids, including but not limited to eyeglasses and hearing aids. Just make sure to keep a careful record of what you've spent, as well as all of your receipts.
Increase Your Tax Deductions Tip 3: Tax Credit for Child and Dependent Care
If you have small children, then you're probably paying what seems like a small fortune in daycare. Fortunately, you may qualify for a child and dependent care credit that could reduce your tax bill. Starting in 2018, the amount of that credit was doubled from $1,000 to $2,000 per qualifying child (a dependent who will be under the age of 17 at the end of the year). And this credit isn't just for daycare centers or babysitters. If both parents are working, you can also use it for other childcare options, such as for a summer camp. There is also a $500 credit for dependents who don't qualify for the $2,000 credit, such as an elderly parent who you are caring for in your home.
Increase Your Tax Deductions Tip 4: Higher Education Credit -- It's Not Just for Your Kids
Have you gone back to school to earn an undergraduate, graduate or professional degree or to improve your job skills? Then make sure you learn more about the Lifetime Learning Credit, which can be worth up to $2,000 per tax return.
Increase Your Tax Deductions Tip 5: :Baggage Fees If You Are Self-Employed
Nowadays, it seems like the airlines are always trying to nickel and dime passengers to death with additional baggage charges. And those can add up quickly if you travel a lot for your business. The good news is that if you're self-employed, you can actually deduct these charges as a business expense.
Increase Your Tax Deductions Tip 6: Going Green Can Save You Green
If you've purchased an electric car, you may be eligible to take the Qualified Plug-in Electric Drive Motor Vehicle Tax Credit. There is one major caveat, though. The credit is only good for the first 200,000 electric cars that a manufacturer sells. So while most of the electric car manufacturers are still eligible for this credit through the end of 2018, at least one, Tesla, may be close to hitting that limit. Also make sure to check with your state or local government, as they may also offer their own tax credits for the purchase of an electric car.
Increase Your Tax Deductions Tip 7: Don't Forget Deductions for Work-Related Items
Does your employer require that you wear a certain type of apparel, such as steel-toed boots for work on a construction site? Then make sure to keep your receipts because if your employer won't reimburse you for the costs of your boots, you may be able to deduct their cost. Other safety items, including hard hats, or uniforms, such as those worn by a nurse, are also covered under this deduction. Not covered? Clothes that you can wear for other purposes, such as a suit or a dress.
Increase Your Tax Deductions Tip 8: Consult a Professional - Hire a CPA Today
Of course, there are probably other deductions and credits that you're eligible to take. While you may be able to discover some of them on your own, chances are great that you're going to miss a few. That's why you should consider leaving the preparation of your tax returns in the hands of a professional. A local CPA will have the expertise to not only find you all of your deductions, he or she will also be up to date on all of the new tax laws. Another reason to hire a CPA? The rules and qualifications for these deductions and credits can be very complicated for the average layperson to understand. And, finally, the cost of hiring a tax professional to prepare your taxes is actually another deductible.