Make sure you are taking advantage of the appropriate tax deductions when you go to do your 2014 taxes:
- Child Care Credit –Many parents claim the dependent care credit each year to help cover costs of day care during work hours including after-school day care. But some parents over look claiming the tax credit during the summer. This tax break also applies to summer day camp costs. The key here is the camp is a day only getaway that supervises the child while the parents work.
- Educational Expenses-for taxpayers with college age kids as well as themselves the Internal Revenue Code offers many tax-saving options. The tuition and fees deduction allows for up to $4,000.00 off your taxable income and is available without having to itemize. The lifetime learning credit could provide some students (or their parents up to a $2,000.00 credit and the American opportunity tax credit offers a dollar-to dollar tax break of up to $2,500.00.
- Energy – Efficient home improvements– There are tax breaks available for some relatively easy energy-efficient home improvements. The Nonbusiness Energy Property Credit of up to $500.00 is available for taxpayers who put in place high-efficiency furnaces and boilers, air conditioners, and heat pumps, and the window replacements. There is a $500.00 cap on this credit for tax credits claimed from 2005 on.
- Personal Property Tax– This is the tax paid (often referred to as “owner’s tax”) on the value of automobiles and other vehicle registrations including motorcycles, trailers and RVs.
- Charitable Contributions– Everyone remembers that cash gifts allowed to their favorite charities are deductible and others remember that non-cash gifts such as items donated to Goodwill or ARC are deductible, but there are a few other items that can be deducted. While you can’t deduct the value of your time spent volunteering you can deduct the cost of supplies or materials purchased for the group. For instance, if you buy supplies for a church or Boy Scout project they are deductible. If you are a hospital volunteer or youth group leader and are required to wear a uniform, the cost of that apparel as well as any cleaning costs are considered charitable contributions. Finally, if you use your vehicle for charitable purposes, such as delivering meals to the homebound in the community or taking the Girl Scout troop on an outing the IRS allows for a deduction.
- Health Savings Accounts-Workers can deduct their contributions to a HSA (Health Savings Account) where they can put money in each year to be used for out of pocket medical costs such as office visits, paying deductibles, etc. You must be covered under a high deductible health plan (HDHP) in order to qualify for and HSA. You can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you do not itemize. The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. You can make contributions to your HSA for 2014 until April 15, 2015.
While there are some phase out limits and other stipulations, these deductions are at least worth considering when submitting your support documents for the preparation of your tax return.