No matter who you are, it’s a smart move to take advantage of as many tax write-offs as possible. Plenty of breaks are commonly overlooked. Here are a few you might have missed that have the potential to fatten your wallet.
Child Care
Raising children is expensive. Because of this, the government offers tax breaks to those who have them. Watching dependents is a full-time responsibility, making child care necessary if you’re going to work. The Child and Dependent Care Credit can be applied to the cost of daycare, preschool, summer camp, or covering the expense of a nanny. The amount of credit you get is determined by income; the lower your salary, the greater the percentage you stand to be reimbursed.
Charitable Contributions
Taxpayers can deduct up to $300 in charitable contributions under The Coronavirus Aid, Relief and Economic Security Act. In order to qualify for this deduction, your donation must be made in cash and sent directly to the charity of your choice. Credit is not possible if you forward your money to a donor-advised fund.
Education
The American Opportunity Credit can lower the cost of tuition by up to $2,500 a year for four years. To be considered for this credit, enroll at least part-time in a certified educational institution. The Lifetime Learning Credit is offered to students who take classes but are not working toward a degree. It covers up to 20% of expenses rising to $10,000 and can be worth as much as $2,000 per return.
Freelancing
If you’re self-employed, there are many deductions you can take. Office equipment, such as computers, filing cabinets, and printers, can all be claimed. You are even able to deduct the cost of phone calls and gas for driving to see clients. Use an app that’s designed to track these items for maximum savings.
Retirement
Tax credits are offered to those who contribute to a retirement savings plan. Whether you’re talking about an IRA, 401(k), or 403(b), you may take advantage of these savings even if you recently got laid off. Young people tend to overlook this credit. This is unfortunate, as these credits can be valuable tools for building wealth early in life. As soon as you are over 18 and no longer a dependent, look into these savings opportunities.
The government wants to take as much of your money as possible, so it isn’t going to tell you if you’re overpaying and missing certain tax write-offs. Be proactive about discovering every money-saving avenue at your disposal.
