The new year brings resolutions, but it also brings taxes. So, if you’ve resolved to keep more of the money you made last year, take a look at this list of often-overlooked tax deductions.
State sales tax
Louisiana has its fair share of state taxes. But you can turn these in your favor by claiming them on your tax return. And don’t worry about the receipts. This handy IRS calculator shows you how much can be deducted in your state.
If it sounds too good to be true, well, you are right. There’s a catch.
The write-off is added to your local property taxes. So, it can still work in your favor, but you’ll probably want to talk to a CPA first.
Out of pocket charity expenses
It’s no secret big charitable gifts can be deducted, but so can little out-of-pocket expenses. So keep your receipts if you bought small items like ingredients for a non-profit fundraiser dish.
There’s more good news.
If you use your personal vehicle for charitable activity, the IRS will allow you to deduct 14 cents per mile, including parking and toll fees
Credit for dependents
The child tax credit payments have been big news this year, especially for those with children under the age of 16 in 2020. That age went up to 17 in 2021.
But the credit for dependents helps those whose dependents didn’t meet those age requirements. You can deduct $500 for each college-age dependent over 17. It also counts for elderly relatives you care for at home.
However, like the child tax credit, it starts to phase out when your adjusted gross income reaches certain limits established by the IRS.
American Opportunity tax credit
Did you pay college expenses for yourself, a spouse, or a dependent? This tax credit lets you deduct $2,500 per student if it was claimed for costs incurred in the first four years of college. You can claim tuition, books, and classroom supplies.
There is an income limit of $80,000 for single filers and $160,000 for married couples filing jointly.
Lifetime Learning Credit
If you or your spouse took courses this year that can lead to new or improved job skills, you might be able to claim this credit. Expenses must be at least $10,000, but you can claim up to $2,000 per year. This credit is subject to income limitations as well, and is non-refundable.
Military Reservist Travel Expenses
If you serve in any military reserve branch or the National Guard, you can apply for this deduction. It lets you write off the cost of travel for trips more than 100 miles where you had to be away from home overnight.
The rate is 56 cents per mile for 2021 and includes what you paid for parking fees and tolls.
Health insurance premiums for self-employed
If you meet the IRS definitions for self-employment, you can deduct any health insurance premiums you paid. However, there are other qualifications for this tax deduction.
You must show a net profit for the year. Also, you can’t be eligible for an employer-sponsored medical plan or long-term care insurance.
Deductions can potentially be made on dental, medical, and long-term care insurance.
Before you start to claim any of these credits, study them to make sure you qualify. There are literally dozens more just like them, so it may be worth talking to a tax advisor or CPA to determine what you are eligible for this year.