THE MOST OVERLOOKED TAX BREAKS!!!

SALES TAX

For taxpayers who itemize deductions, the IRS offers the choice of deducting either state income taxes or state sales tax, whichever is higher of the two. This is important especially for states with no income tax, like Nevada!

CHARITABLE DEDUCTIONS

You can write off out-of-pocket costs incurred while doing work for a charity. If the totals are more than $250 you’ll need acknowledgement form the charities documenting your support. Also, if you drove your car for the charity you can deduct 14 cents per mile.

CHILD TAX CREDIT

Child tax credit allows individuals who pay for day care expenses for their children or disabled adult dependents to receive a tax credit of up to 35% percent of the cost of day care.

JOB HUNTING COSTS

The millions of unemployed Americans who were looking for a job in the same line of work in 2013 can deduct job-hunting costs as miscellaneous expenses, if itemized. Qualifying expenses can be written off even if a new job wasn’t obtained. Expenses can be deducted only to the extent that one’s total miscellaneous expenses exceed 2% of the person’s adjusted gross income.

AMERICAN OPPURTUNITY TAX CREDIT

This tax credit helps pay for college expenses. The full credit of $2,500 is available to qualifying individuals, whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit can be claimed for expenses for the first four years of post-secondary education.

EARNED INCOME TAX CREDIT (EITC)

This credit lowers the overall tax bill for low- and moderate- income working families. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

RETIREMENT SAVINGS CONTRIBUTIONS CREDIT

This credit makes it easier for lower-income families to save money for retirement. The amount of the credit is 50%, 20% or 10% of a retirement plan or IRA contributions up to $2,000 ($4,000 if married filing jointly). Income limits are $29,500 (single), $44,250 (head of household) or $59,000 (married filing jointly).

WAIVER OF PENALTY FOR NEWLY RETIRED

Our tax system operates on a pay as you earn basis meaning tax payers typically pay 90 percent of what they owe during the years. If you don’t and you owe more than $1,000 you can be hit with a penalty for underpayment. The penalty works like interest on a loan at a current rate of 3 percent. There is an exemption for tax payers age 62 and older for the year they retire and the following year. You can request a waiver of the penalty using form 2210.