Tax Deductions Many People Forget
With the many different forms and the complicated rules to follow, personal taxes are often seen as a headache. This is especially true for those who want to itemize their deductions or who are self-employed. While taking deductions can help reduce the amount of money owed, not everyone knows what can be deducted. The following are some of the less obvious tax deductions that filers often forget to claim.
Many people know that charitable donations can be deducted, but few realize that this deduction covers more than just money given to causes. The value of any items donated can also be deducted, as can mileage driven while doing work for a charity.
If the filer’s parents paid off any of their student loans, the interest the parents paid on those loans can be deducted. However, the parents must not claim the person on their taxes as a dependent. This deduction also has a cap of $2,500.
Similarly, those who are college students can take the American Opportunity Credit. This allows them to deduct $2,000 worth of all qualifying expenses they made related to their education, then an additional 25% of another $2,000. In total, a person can take a $2,500 deduction every year for a maximum of four years if their income is less than $80,000 (single) or $160,000 (married and filing jointly). Those who already have a degree but take continuing education courses may also be eligible for the Lifetime Learning Credit. This depends on their income.
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