Tax Attorneys and tax code helped them, and can help you too!
If you’ve been watching the news lately, then you may have heard that General Electric – one of the US’ largest corporations – paid no taxes in 2010. That’s right, the conglomerate that makes everything from appliances to jet engines with billions in income didn’t pay a nickel to Uncle Sam’s coffers.
That probably makes you wish that you could hire an army of tax attorneys, lobbyists and accountants like GE does. But while their tax attorneys are making the tax code work for them, we’re making it work for you with our list of sizable unused tax deductions and credits that can save you big bucks every April.
- Home Mortgage Interest: If you’re a homeowner, even if you own two homes, you’d be throwing money away if you don’t take this deduction. The interest you pay on a mortgage can be fully deductible, reducing your adjusted gross income by hundreds or even thousands of dollars every year.
- Child care expenses: If you have children and aren’t lucky enough to work out of your home, the cost of child care can add up. Some employers provide it onsite at work locations, but for those of us who have to pay for it, the tax code gives us a little gift. The Child and Dependant Care Credit can reduce your tax burden by thousands if you pay for the care of at least two children under the age of 13.
- Moving expenses: if you made the move to a new town for work-related reasons, then you may be able to deduct your moving expenses on your tax return. If you just moved across town, you’re out of luck. According to the IRS, your new job location must be at least 50 miles away from your old home, among other requirements. But moving isn’t cheap, so make sure to use this deduction in April.
- Student loan interest: For those who took out student loans to pay for their college education, the interest you pay each year is deductible, but only up to $2,500. While your debt load may be high, this deduction is just one of many that can be used to make your AGI low. The best part is that even if your parents pay your student loans for you, you can still deduct the interest they pay for your own tax return.
- Charitable contributions: If you perform any charitable work for a nonprofit organization, the costs incurred that went toward your charitable acts can be deducted. Buying supplies for a nonprofit organization’s fundraiser can count, as well as the number of miles you drove to get to scene of the organization you volunteered for. While you probably won’t get paid for volunteering for good causes, it’ll pay you back at tax time.
- Medical expenses: With the cost of medical care rising each year, it can also serve as a great source for a sizable tax deduction. A wide range of medical expenses – including HMO premiums – are eligible, but only the portion of your medical expense that are greater than 7.5 percent of your adjusted gross income can be deducted.
- Job hunting expenses: This economy is pretty tough for a lot of people, so it’s encouraging to hear that the costs for looking for work can count as a deduction If your search took you away from your hometown overnight, then food, lodging and transportation costs can be eligible. Also eligible are cab fares, fees paid to employment agencies and the cost of printing and mailing your resume.
- State taxes: If you’re not deducting your state sales or income taxes, then you’re missing out on a sizable deduction every year. You can only do one (not both), and if you live in a state with no income tax (like Florida), then deducting your state sales tax makes sense. The IRS provides a table on how to calculate your deduction, but if you bought a large item like a car or boat, then make sure to include it. But keep your receipts, as the state tax deduction will expire at the end of 2011
Small gifts in the tax code can help you pay less to the IRS, just like GE did last year. But if you have back tax debt, you won’t get the same treatment they did. The IRS will have you pay more with wage garnishments, bank levies and mountains of interest that add up over time.