Discover the Most Overlooked Tax Benefits
Reduce your taxes by claiming tax deductions. The following is a list of tax deductions most people miss on Intuit’s Turbotax.
State Sales Tax
When doing business, payment of sales tax to the state is often necessary. For individual taxpayers, moneys paid towards sales tax can be claimed as tax deduction. For instance, if you purchased a car, you can claim a deduction equivalent to the sales tax rate for your state on the value of that vehicle.
This is not really a tax deduction but it can save you a significant amount of money. If you reinvest mutual fund dividends in additional shares, you can increase you tax saving-loss, or reduce the taxable capital gain, when you dispose of your shares.
Personal Charitable Contributions
The little costs you incur when supporting a charitable cause matter a lot. For instance, if you bought postal stamps to send invitations to potential contributors for a fundraiser, or bought ingredients to make soup for the guests, you can claim the deduction.
Interest Paid on Student Loans by Parents
If you are not listed as a dependent by your parents, you can claim a deduction equivalent to interest payments made by your parents, up to a maximum of $2,500. The IRS assumes that your parents gave you the money and you made the payments, so you qualify for the deduction.
Moving Expense Related to your First Job
If you land your first job, which requires you to move from where you currently live, you can take comfort in the fact that you can claim a tax deduction on the moving expense. The best thing about it is that you can still get the deduction even if you do not itemize. The standard rate is 23 cents for every mile, provided you moved more than fifty miles.
Child Care Tax Credit
This is a credit, not a deduction. It applies to expenses incurred while raising a child. Parents and guardians can claim this deduction if they spent up to $6,000 on child care-related expenses. This tax credit can reduce your tax bill by over $200.