Just when you start to recover from the holiday season, another wonderful season comes along! The difference is, no one loves tax season or doing their taxes. Well, except for me! Fortunately, there are a lot of deductible items out there to help you save on your tax bill or bulk up that refund. Here are a few things to think about as you prepare to do your taxes this year:
File early. If you file your tax return early in the season, you’re less likely to become a victim of tax identity theft. Here’s why: Criminals tend to file fraudulent returns early, so they can get to the IRS before you.
Fantasy winnings are real. If you win money or prizes in a fantasy football league, you need to report those earnings as “other income” on your federal tax return. Keep track of losses, too. You can claim them as long as they don’t surpass winnings.
No tax on child support. Child support is not considered alimony, and therefore, is not taxable. Alimony, on the other hand, is considered taxable income.
Teachers can deduct. Elementary, middle school, and high school teachers who pay out-of-pocket for supplies can deduct up to $250 for non-reimbursed expenses.
Job search deductions. If you looked for a job in your current profession, you can deduct certain job search expenses, such as LinkedIn Premium or travel expenses to and from interviews.
Childcare is a write-off. Childcare expenses may qualify for a federal tax credit of up to 35 percent of your allowable expenses. You could receive up to a $3,000 credit for one child or $6,000 for two or more. Typically, expenses for children under age thirteen qualify. Overnight camps don’t count.
Kids and tax credits. Parents who welcomed a new baby can deduct certain medical expenses, like breast pumps and supplies (such as nursing bras), hospital services to deliver your baby, and more.
Unemployed and taxed? If you receive unemployment compensation, you should receive Form 1099-G. Any unemployment compensation received must be included in your income.
Ask about earned income credit (EIC). Eligible taxpayers who are working may qualify for this refundable tax credit. Even if you don’t owe taxes, you could claim a refund.
Military combat pay. If you serve in a combat zone, you can choose whether to claim combat pay for the EIC. This decision can increase or decrease the amount of the EIC received. Combat pay, the basic allowance for housing, and the basic allowance for subsistence are considered non-taxable income.
On-the-job deductions. Union dues, job-related magazines and books, and clothes or uniforms that are not everyday wear may be deductible.
Student loan relief. You can deduct up to $2,500 in interest paid on qualified student loans. Your deduction limit decreases and phases out based on your income.
College tax relief. Payments made in the first three months of 2017 to a qualified educational institution can be used toward credit on your 2016 tax return with regards to the American opportunity credit, the lifetime learning credit, and the tuition and fees deduction.
And finally … be on the lookout for scams! That’s not the IRS threatening you on the phone. It’s a scammer! The IRS will never call you to demand immediate payment for a tax issue or threaten to bring in police to arrest you. If you get such a call, do not provide information or send money. Take the caller’s number, then call the IRS.