Which Tax Deductions Are You Missing Out On?

Kiplinger reports that the 45 million taxpayers who itemize their deductions on income tax returns claim more than $1 trillion worth of deductions, while the 92 million taxpayers who use the standard deduction claim about $700 billion worth of deductions. That’s big bucks! Missing even one deduction or tax credit can have a significant impact on your final tax bill (or refund), so whether you tackle your income taxes on your own or hire a tax professional to do them for you, it’s to your benefit to be aware the ever-changing IRS tax rules. Not only do yearly changes to the tax code affect you, but changes to your own life circumstances can also impact your tax situation. Below are just a few of the commonly missed deductions and credits that might apply to you: Child-care credit – If you work and pay for child care (daycare center, in-home daycare, or nanny services all apply), you can qualify for a tax credit of up to $3,000 for a single child or up to $6,000 for two or more children under the age of 13. Exact amounts depend on your gross income, and other rules do apply, so check with a tax pro to learn exactly how you can benefit. Charitable deductions – Most of us think of the major donations we make to organizations throughout the year. But don’t forget about the little things—it all adds up! If you use your own money to perform a task for a non-profit (a mailing, for example), you can include those expenses as part of your total charitable contribution. Keep your receipts, and if you’ve spent over $250, be sure to have the charity document your gift. Travel for volunteer work – If you use your own vehicle while doing volunteer work, you may be eligible to use the standard mileage deduction if you track the miles you drove in 2011. In addition, the cost of meals, public transportation, overnight accommodations, and gas are also deductible when you travel away from home to volunteer. (READ MORE)