The key to reducing taxes and getting the maximum tax relief are the deductions. As a taxpayer, make sure that you know what the most recent deductions are and include all that are applicable to you on your tax return. Don’t forget these frequently forgotten deductions that can be included on your tax return:
1. Charitable Contributions – Though it’s not likely that you’ll forget the large donations you made, the smaller ones add up. If you volunteered as a make-up artist at a function, remember to deduct the cost of the make-up items you used.
2. State Sales Tax – You are allowed to deduct the entire amount of state income tax or sales tax you paid in the year before. If no state or local income tax applies in your area, then deduct the entire sales tax paid.
3. Medical Expenses – When your adjusted gross income is calculated, if your medical expenses for one year adds up to 7.5% of this adjusted gross income, you are allowed to deduct it from your taxable income.
4. College Tuition – A deduction of $4000 is allowed for college tuition on dependents, spouse or yourself. When a taxpayer’s income is over the limit to qualify for the Hope or Lifetime Learning credit, this deduction is very helpful.
5. State Taxes Paid the Year Before – Additional state taxes paid in the previous year can be deducted from current income tax return. State income tax taken from your salary can also be deducted.
6. Cost of Preparing Income Tax Forms – This includes the cost of the services or tax software purchased. You can claim it in the tax year you paid them
7. Jury Payments – There are employers who pay employees the full salary when said employee is on jury service. These employers ask the employee to give up the jury payments. In such cases, a person can deduct the total sum of this forfeited amount.
Each of these deductions adds up to significant tax relief, so make a note of them and claim all to which you are entitled.