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Thrifty Tips - Don't miss these little known tax deductions.
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Tuesday, February 2, 2016
Greetings Thrifty Friends,
It is February and that means those W-2s are in the mail right now (if you haven't already gotten yours). If you are getting any of your tax money back from the government you shouldn't wait to file.
If you aren't expecting to get any of your tax money back from the government, make sure you haven't overlooked any of these money-saving deductions.
Don't pay a cent more than you have to. Make sure you claim all the breaks you deserve.
Keep pinchin' those pennies,
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TODAY'S THRIFTY TIP:
If you were among the millions of unemployed Americans who were looking for a job in 2014 you can deduct job-hunting costs as miscellaneous expenses if you itemize. Qualifying expenses can be written off even if you didn't land a new job. But such expenses can be deducted only to the extent that your total miscellaneous expenses exceed 2 percent of your adjusted gross income. Deductible costs include; Transportation expenses incurred as part of the job search, including 56 cents a mile for driving your own car plus parking and tolls, Food and lodging expenses if your search takes you away from home overnight, Employment agency fees and costs of printing resumes, business cards, postage, and advertising.
Moving Expenses to Take Your First Job
Although job-hunting expenses are not deductible when looking for your first job, moving expenses to get to that job are. And you get this write-off even if you don't itemize. To qualify for the deduction, your first job must be at least 50 miles away from your old home. If you qualify, you can deduct the cost of getting yourself and your household goods to the new area.
A credit is so much better than a deduction; it reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that's subject to tax. You can qualify for a tax credit worth between 20 percent and 35 percent of what you pay for child care while you work.
When you buy a house, you get to deduct in one fell swoop the points paid to get your mortgage. When you refinance, though, you have to deduct the points on the new loan over the life of that loan. That means you can deduct 1/30th of the points a year if it's a 30-year mortgage. That's $33 a year for each $1,000 of points you paid--not much, maybe, but don't throw it away.
Student-Loan Interest Paid by Mom and Dad
Generally, you can deduct interest only if you are legally required to repay the debt. But if parents pay back a child's student loans, the IRS treats the transactions as if the money were given to the child, who then paid the debt. So as long as the child is no longer claimed as a dependent, he or she can deduct up to $2,500 of student-loan interest paid by Mom and Dad each year. And he or she doesn't have to itemize to use this money-saver. (Mom and Dad can't claim the interest deduction even though they actually foot the bill because they are not liable for the debt.)
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