Since the deadline to file taxes is just around the corner, I thought I would share with you some deductions you may not have known about to help you save even more money. I did some research at turbotax.com and found a few very interesting deductions that even I didn't know about. These are just 5 of the many deductions available to everyday Americans just like you:
1. State sales taxes
If you purchased a vehicle, boat or airplane, you get to add the state sales tax you paid to the amount shown in IRS tables for your state, to the extent the sales tax rate you paid doesn't exceed the state's general sales tax rate. The same goes for home building materials you purchased. These items are easy to overlook. The IRS even has a calculator on its Web site to help you figure out the deduction, which varies by your state and income level. Click here to check it out!
2. Out-of-pocket charitable contributions
It's hard to overlook the big charitable gifts you made during the year by check or payroll deduction. But the little things add up too, and you can write off out-of-pocket costs you incur while doing good deeds. Ingredients for casseroles you regularly prepare for a nonprofit organization's soup kitchen, for example, or the cost of stamps you buy for your school's fundraiser count as a charitable contribution. If you drove your car for charity in 2010, remember to deduct 14 cents per mile.
3. Student loan interest paid by Mom and Dad
In the past, if parents paid back a student loan incurred by their children, no one got a tax break. To get a deduction, the law said that you had to be both liable for the debt and actually pay it yourself. But now there's an exception. If Mom and Dad pay back the loan, the IRS treats it as though they gave the money to their child, who then paid the debt. So a child who's not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by Mom and Dad.
4. Child care credit
A credit is so much better than a deduction-it reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that's subject to tax.
But it's easy to overlook the child care credit if you pay your child care bills through a reimbursement account at work. Until a few years ago, the child care credit applied to no more than $4,800 of qualifying expenses. The law allows you to run up to $5,000 of such expenses through a tax-favored reimbursement account at work.
Now, however, up to $6,000 can qualify for the credit, but the old $5,000 limit still applies to reimbursement accounts. So if you run the maximum $5,000 through a plan at work but spend more for work-related child care, you can claim the credit on up to an extra $1,000. That would cut your tax bill by at least $200.
5. Jury pay paid to employer
Some employers continue to pay employees' full salary while they are doing their civic duty, but ask that they turn over their jury fees to the company coffers. The only problem is that the IRS demands that you report those fees as taxable income. If you give the money to your employer you have a right to deduct the amount so you aren't taxed on money that simply passes through your hands.
These are just a few that I found but a complete list can be found here. So research these easy free deductions and you just might have a merry tax day after all!