Every time tax season rolls around, we all secretly wish we would have paid a little more attention in our college accounting class, or were best friends with a CPA. If you aren’t lucky enough to have strong personal ties with a tax professional in your immediate area, arm yourself with the right questions so you can file correctly and get the maximum refund allowed to you. Read on for some common write-offs you may qualify for* – and hopefully make sense of that shoebox full of receipts you’ve been holding on to.
Student Loan Interest
Still paying off that degree you earned for yourself? If you did happen to study finance or accounting, you may already know this, but the interest paid on student loans is a tax deduction. Be sure to double check how much you are allowed to write off. While the maximum per year is $2,500, how much you make per year could limit how much you are allowed to claim (see the limitations from this year).
While certain employers may offer child care payment options that could save you more than the child care tax credit (talk with your HR department to see what, if anything, is offered), this credit is something all parents should take note of. Like with all write-offs and credits, there are some qualifications you must meet, they’re pretty straight forward. Some of the high-level requirements include:
- The dependent must fall into one of three categories, as outlined by the IRS
- The care must be provided by a qualified individual (one that is not your spouse, parent of the child, another one of your dependents, or someone aged 17 or younger)
- You must have “earned income”
- The childcare you claim must be because you are working or looking for work
You may also be able to deduct some of the cost of a babysitter, outside of the time you are at work, if you happen to be volunteering for charity (without receiving compensation). While you’ll have to document that you were, in fact, volunteering, you may be able to claim the amount you paid to the sitter as a charitable contribution.
Moving for Employment
Moving always becomes quite a production and when you move over 50-miles, it’s usually an even bigger stress – trying to learn about a neighborhood, set up home tours and land a new job– all remotely. If you’ve made a move for a new job this year, you may be eligible to write off some of your moving expenses. Two big factors in being able to claim this write-off: distance (your new home must be 50-miles further from your previous lodging this your last place of work was) and time.
Parents as Dependents
Although it may be well-known that you can claim your children as dependents on your taxes, “If you’re providing more than half of a parent’s financial support, you may be able to claim your parent as a dependent,” says Curtis Erickson, a certified public accountant, personal financial specialist and certified tax coach.
As a reminder, here are the 4 tips all in one image – just click on the “Pin It” button below to pin!
Check back next week for Part 2 of this post where we explore further tax write-offs.
*The information contained in this article is for general guidance only and does not constitute legal or tax advice. Contact a professional tax advisor concerning your specific tax circumstances and available deductions.