When it comes to your taxes, a little legwork can go a long way. If you don’t itemize deductions or you overlook some, you will end up paying too much money when you file. That’s one mistake the IRS won’t catch for you.
Debbie Kutzavitch carefully preps each homemade meal. In her home office, folders, papers, and receipts are all neatly stacked. Kutzavitch is always organized, but especially at tax-time she believes in following a plan.
“I know that’s probably a four-letter dirty word for some people,” said Kutzavitch.
Sometimes, no matter how prepared you are, there’s something you’ve overlooked. Experts say the U.S. tax code is overwhelming and changes almost daily. It’s over 70,000 pages in paper.
“If you fail to check your itemized deductions and just take the standard, you might be leaving money on the table,” said Paula Rummell, CPA and Tax Senior Manager at Horovitz, Rudoy and Roteman, LLC.
Medical costs are tax deductible. Your health insurance premiums, dental care, glasses, counseling and therapy all count. Also, you can write off miles driven to medical appointments.
“They are deductible to the extent they exceed a certain threshold, and that percentage is 7.5% of your adjustable gross income,” explained Rummell.
Education costs are often overlooked. Parents paying for college can take a tuition and fee deduction of up to $4,000. Even grad students can earn a break with the Lifetime Learning Credit. That adds up to $2,000 each additional year of college. Hunting for a job? You can claim the expense and you can put money into your IRA up until April 14th and not be taxed on that money.
These are just a few of the most overlooked deductions, all part of a good recipe for getting money back this tax season.
Experts also say if you’ve loaned someone money and don’t get repaid you could qualify for a non-business bad debt tax deduction. You could claim a loss of up to $3,000 a year.