Are you Claiming These Four Deductions on Your Taxes? Every year, millions of people overpay their taxes because they overlook key deductions that are available to them. From childcare, to student loans, there are many ways that you can save on your taxes. Don’t be one of the few who miss out on tax deduction benefits. Read on to learn about four deductions that you should be claiming. Student Loan Interest Did you know that if your parents help you pay back your student loans that qualifies as a deduction? When a parent pays their child’s student loan, the government views it as a gift towards the child, even though they are paying off debt. This only works, however, if the child is no longer claimed as a dependent. They can subtract up to $2,500 of student loan interest that were paid by their parents. And the best part, they don’t have to itemize. Unfortunately, despite footing the bill, mom and dad are not eligible for this tax deduction. Job Search Costs There were millions of people unemployed in the year 2014, who were searching for jobs. Hopefully you were keeping track of your job search, or you are able to recall what jobs you applied to. If you were looking for a job in the same line of work as your most recent job position, you can actually deduct certain job related cost as itemized expenses. You can write the expenses off, even if you aren’t hired by a new employer. Something of note, your total expenses must exceed 2% of your gross adjusted income. Items that you can deduct are transportation costs, as a result of your job search, including gas, tolls, and parking, cab costs, employment agency fees, resume, business cards, and postage costs. Child Care Credit A tax credit is more beneficial than a deduction because it reduces your tax bill dollar for dollar. Provided you have children, you are eligible for a childcare tax credit between 20% and 35% of what you pay for childcare, while you are at work. However you are not eligible if your company provides childcare services to its employees. Legal Fees In Alimony Cases Before you get too excited, legal costs and court fees that you incur during a divorce are nondeductible, because they are considered personal expenses. However you do have the option of deducting a portion of your attorney’s bill. Alimony is income that is taxable, so you can subtract the part of legal counsel’s fees that are contributing to setting the amount. You can also deduct a portion that is credited to obtaining tax advice. The only way to receive this deduction is by itemizing in the miscellaneous expense section. Just be sure to get your attorney to provide a detailed breakdown, so that you know how much of it is eligible for tax savings.
Tax season can be a happy time or a sad one depending upon if you owe or are receiving money back. But try to eliminate the burden, by staying educated about the various deductions and credits available to you. Job search costs, childcare credit, legal fees, and student loan deductions are just four of unknown tax deductions available, but there are actually many more. Finding out that you’ve saved more than you anticipated, may make this tax season a much more enjoyable one.