5 Overlooked Tax Deductions

It happens every year. Once you have finished celebrating ringing in the New Year and another fresh start, it is time to deal with tax season. Each year taxpayers make common blunders when filing their tax return, mistakes which can cost them money. The IRS releases information as to what mistakes are commonly made when taxpayers file their return. Here we look at a few blunders which could result in you paying more for your taxes than needed.

1. Smaller charitable donations- While most people will remember writing a large check or donating property, many people fail to keep track of the smaller, out-of-pocket donations which can add up. Any contribution no matter how small can be deducted, including mileage if you used your vehicle for any charitable cause. If you donate money for a fund raiser for your child’s school or daycare, this can be included as a tax deduction.
2. Travel expenses for military reservists- If you are a member of a military reserve or National Guard you may be able to get a deduction for traveling to meetings or drills. In order to qualify you must stay overnight and travel over 100 miles from your home. Qualifying individuals can deduct the cost of lodging, mileage if you use your own vehicle, parking fees, tolls, and half the cost of your meals.
3. Refinancing points- Many people have refinanced their home and many didn’t realize you can deduct 1/30th of the points (if it is a thirty year mortgage). This may not be a huge deduction, however every little bit helps when you are trying to lower your tax bill.
4. Child care credit- This is a big one you don’t want to miss. Since this is a tax credit versus a deduction you will reduce your tax bill dollar for dollar. This credit is given to parents who pay for child care in order to work. Claiming this credit can reduce your tax bill by several hundred dollars.
5. Energy-saving home improvements- For 2009 the 10% tax credit has increased to 30% of the cost of energy saving home improvements. The rules have changed for 2009 and 2010 so make sure you are familiar with these changes to ensure you are getting the most credit possible. Qualifying improvements include adding energy saving windows and doors (exterior), high-efficiency furnaces, air conditioners and water heaters and energy efficient appliances.

We all want to save money and what better way than reducing the amount you have to pay on your tax bill this year. Every dollar saved can be used toward savings, debt repayment or even a rainy day fund.