7 Tax Deductions You Don’t Want to Miss
Be sure these easy-to-miss deductions are included on your return before you file.
Planning to take standard deductions rather than itemizing? You may be one of the millions of Americans missing out on credits and deductions you’re entitled to every year. Be sure these easy-to-miss deductions are included on your return before you file:
1. Expenses accrued during a job search.
If you were unemployed in 2010 you’re eligible to deduct much of the cost of your job hunt. The deductions fall under the category of miscellaneous expenses, and can add up to no more than two percent of your adjusted gross income. Legitimate expenses in this category include food, transportation, accommodations, headhunter fees, and printing costs, among others.
2. Up to $6,000 in childcare credit.
Many employers will reimburse up to $5,000 for employee childcare expenses. But if you have two or more kids, you’re eligible for a $6,000 credit, which means that even if you receive the full $5,000 from your employer, you can still claim an additional $1,000 credit when you file.
3. Up to $2,500 for college tuition.
If you earn less than $80,000 (or $160,000 as a married couple filing jointly), you’re eligible for up to $2,500 towards college tuition courtesy of the American Opportunity Credit. The credit can be used for four years of college and is partially refundable if it’s greater than the amount you owe.
4. Everyday charitable contributions.
Those cookies you made for the community center bake sale and reams of paper you donated to your local public school may seem like small expenses, but $10 here and $20 there adds up over the course of a year. As long as the recipient is a not-for-profit organization, such donations are legitimate charitable contributions and are tax deductible. Remember to get a receipt from the organization for anything over $250.
5. Relocation costs for a starter job.
Depending on your age, this one may apply more to your grown children than yourself. Anyone who was hired for his or her first job in 2010 and relocated more than 50 miles away for purposes of employment qualifies to deduct the cost of relocation. Eligible expenses include moving companies, personal transportation, parking, tolls, and 16.5 cents per gallon of gas if you used your own car.
6. Up to $2,500 for student loan payments made by parents.
Here’s another one to forward to your post-college kids. Children whose parents paid back interest on their student loan debt are eligible to receive up to $2,500 in tax deductions (even if repayment isn’t yet legally required). Why? Because any repayment a parent makes on a child’s debt is considered a gift, and is viewed as having been paid by the child rather than the parents.
7. Last year’s state tax.
This one’s almost too easy to overlook. If you owed state tax last year (2009) don’t forget to deduct the amount you paid on your 2010 return.