By Courtney Gonzalez
Tax season is upon us. It’s time to collect every tax deduction and credit you can. The information in this article will provide a basic overview of commonly missed tax deductions.*
On top of the debt you owe on your student loans, interest can compound and extend the time you spend paying. Student Loan Interest Deduction can aid you with a deduction of the interest you paid on your student loans. It caps at $2,500 in total interest per return. That’s particularly important for spouses filing together, since the cap does not apply individually.
If you’ve donated to an eligible charity in the past year, you can utilize the Charitable Contribution Deduction on your returns. It must have been physical cash or property – promises or pledges to donate will not count. Charitable causes do not include individual gifts, money given to political purposes, labor unions, for-profit schools and hospitals, or contributions to foreign governments.
Unlike previous years, Moving Expenses are deductible only for active military that have moved homes due to a military order. If this applies to your household, it’s a deduction worth taking. Additionally, any armed force reservist can use the Tax Considerations for Reservists to recoup travel-related expenses for any reserve services work performed more than 100 miles from their home.
Good news for anyone who is self-employed – the IRS has changed the rules regarding Medicare insurance premiums. Thanks to Deduction of Medicare Premiums for the Self-Employed, you may be able to deduct the premiums you’ve paid for Medicare coverage.
The Earned Income Tax Credit provides support for low and moderate income families. The credit rate and maximum credit you can earn varies by family size. Be aware that if your earnings reach a certain threshold, the maximum credit will start to decline.
If you provided at least half of your child’s support during the last year (including having lived with you partially through the year and must be 16 or younger) you may be eligible for the Child Tax Credit. It can offer up to $2,000 per qualifying dependent child.
Last but not least is the American Opportunity Tax Credit. This helps reduce the cost of attending college for taxpaying students or their parents. There are a few requirements you must meet, including being in your first four years of school, enrollment during the tax year, and maintaining at least a half-time status leading to a degree.
Taxes can certainly be a frustrating time of the year for most of us, which is why it’s important to know every deduction and credit you qualify for. To save you the headache of keeping track of every break, let TurboTax do the heavy lifting. Members of Generations Federal Credit Union can claim a discount on our website.
* This article is provided for informational purposes and is not intended to be used as tax advice or guidance. Contact your tax advisor for specific questions about your eligibility for specific deductions.