The old saying goes that there are only two certainties in life: death and taxes. While this may be true, there is also a lot you can do to tame both. To live a long, healthy life, eat well and exercise. For help with taxes, make sure you’re not paying more than you need to. Here are six tax deductions you’re probably not taking, though.
Sales Income Tax
This is by far the largest deduction that most people don’t take, even though it’s easily worth thousands of dollars. If you live in a state that assesses a sales tax, every cent you paid over the course of the previous year can be claimed as a deduction. No matter what it is you purchased, if you paid for sales tax during the transaction, it’s a write-off.
Any medical expenses you covered for the year are also deductions you’re entitled to take. This includes things like hospital visits, elective procedures and even prescriptions.
Now, obviously, you can’t list these as write-offs if your employer covered them or you were reimbursed by insurance. The other stipulation is that these expenses must exceed 7.5% of your adjusted gross income before you can claim these deductions.
Another huge deduction that too many people don’t know about involves childcare. If you’re a parent, you already know it costs a small fortune just to make sure your son or daughter is properly looked after. Daycare is especially expensive, but you can write that cost off.
Just use the Child and Dependent Care Credit which is available to any parent of a child 12-years-old or younger who used daycare so they could work. Summer camps are covered too, so long as the child’s enrollment was necessary so you could go to your job.
If your child is taking part in higher education, you can deduct as much as $4,000 from your taxes each year. This only applies to one child, though, or you can use it for yourself or your spouse.
Student Loan Interest
Student loans are the bane of most college graduates’ existences. A small silver lining is that at least you can deduct your fees and even the interest. Again, this applies to payments you may have made for children or your spouse’s education too. As long as you don’t make more than $80,000 a year, this can usually be a pretty healthy deduction to look forward to (that income bracket is prohibited from taking advantage of this opportunity).
If you got your mortgage insurance policy after 2007, you can probably deduct the sum you’ve paid toward the premium. Similarly, you can claim the interest you put toward your mortgage points too. Don’t worry you missed the boat if you’ve refinanced either as you can spread these interest points over the life of this brand new mortgage as well.
Don’t pay more than you have to in taxes every year. Instead, by practicing a bit of forethought and putting time into your filing, you could be saving thousands of dollars.