(NEXSTAR) – Tax season is right around the corner and with the new year, you may already be receiving some of your tax documents.
If you are gearing up to file your taxes, you won’t want to miss some of these commonly forgotten tax deductions and credits. Deductions can reduce the amount of tax you owe. You may also be eligible for tax credits, which can also reduce the amount of tax you owe or increase your tax refund.
TAX DEDUCTIONS
Sales tax
Instead of deducting income taxes, you can elect to deduct state and local general sales taxes. In most cases, you can do this if the tax rate in 2021 was the same as the general sales tax rate, according to the IRS.
Medical and dental expenses
You can deduct medical or dental expenses you paid for yourself, your spouse, and your dependents if the amount of your total medical expenses exceed 7.5% of your adjusted gross income, the IRS reports.
“Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.”
For more information click here: https://www.irs.gov/taxtopics/tc502
Teachers’ expenses
If you’re a teacher, you can deduct up to $250 of any unreimbursed expenses for classroom materials like books, supplies, computers, or other equipment used in your classroom. Click on the following for more:
https://www.irs.gov/individuals/deducting-teachers-educational-expenses
Charitable contributions
Money or property you gave to certain groups – religious organizations, the government for public purposes, nonprofit schools and hospitals, war veterans’ groups, and numerous other organizations – can be deductible as charitable contributions, according to the IRS. Generally, you can deduct the fair market value of your contribution, but in most cases, your contribution can’t be more than 60% of your adjusted gross income. Click here for additional info: https://www.irs.gov/forms-pubs/about-publication-526
Working from home
If you are self-employed or a partner and work from home, you may be able to deduct certain expenses. The IRS explains that if you regularly and exclusively use your home as your primary place of business or to meet with patients, clients, or customers, you may qualify for this deduction.
You may also qualify if you use part of your home as storage for inventory or product samples, rental use, or a daycare facility. Using a separate structure not attached to your home can also qualify.
The part of your home used for business cannot be used for personal use, the IRS reports. More details can be found here. https://www.irs.gov/taxtopics/tc509
Driving for work
Speaking of work, have you been commuting to the office this year? That could be a write-off.
If you use your car for business and personal purposes, the IRS says you can deduct the cost of using it for business. This can be done by calculating the standard mileage rate method or the actual expense method. You are required by law to substantiate your expenses with records or with sufficient evidence supporting your claim.
TAX CREDITS
Child tax credit
Maybe one of the most well-known tax credits this year is the second half of the child tax credit payments. The federal government recently launched a revamped website to help determine if you are eligible for the credit.
For more information, click: https://www.childtaxcredit.gov/
Driving an electric vehicle
Have you been driving to work (or anywhere else) in an electric vehicle? If your vehicle meets specific requirements, you could receive a tax credit. Under Section 30D(a), the IRS explains you can receive the Plug-In Electric Drive Vehicle Credit if you purchased a car or truck that has at least four wheels, weighs less than 14,000 pounds, and uses energy from a battery with at least 4-kilowatt hours that can be recharged from an external source.
You must have purchased the vehicle in or after 2010 and started driving it in the same year in which you are claiming the credit, according to the IRS. When the manufacturer sells 200,000 qualified vehicles, the credit begins to phase out for that manufacturer.
Energy-efficient home improvements
If you have certain energy-efficient aspects of your home, you could receive a tax credit. Solar electric and water heating; small wind energy; geothermal heat pump; biomass fuel; and fuel cell property costs are eligible to be deducted using Form 5695, found here: https://www.irs.gov/pub/irs-pdf/f5695.pdf
Adoption
Qualified adoption expenses may make you eligible for a tax credit and an exclusion from income for employer-provided adoption assistance.
According to the IRS, expenses include reasonable and necessary adoption fees; court costs and attorney fees; travel expenses; and other expenses directly related to adopting an eligible child. More details can be found here by clicking on: https://www.irs.gov/taxtopics/tc607
This year’s tax filing season began on Jan. 24 and Tax Day has been moved to April 18.
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