Have you already pushed back from your desk, satisfied that you’ve wrapped up your taxes? What if I told you that you may have left money on the table? It’s time to pull yourself back in and review these lesser-known tax breaks that can save you even more.
Transportation costs can take up on average 15-20 percent of your monthly budget, even more if you have a mega-commute. But if you’re like millions of Americans and are a freelancer, independent contractor or own your own business, turn some of that big spending into even more deductions. First, make sure you have a home office that qualifies as your main place of business. Then add up receipts for mileage, tolls and parking.
More and more of us now live in multi-generational households with an aging parent or another relative. If you are supporting a relative financially, you may be able to claim him or her as a qualifying dependent—a $3,700 deduction for 2011. See IRS publication 501 to review qualification requirements, such as citizenship and income ceilings. Also, you may be able to add your relative’s qualifying medical expenses to yours, which could easily put you over the 7.5 percent of adjusted gross-income requirement to allow you to take the medical costs deduction.
This year is a better one when it comes to employment, but 2011 was still rough for many. If you were unemployed all or part of last year, the IRS has expanded it’s Fresh Start program that launched in 2008 to allow you to possibly be free of non-payment penalties for taxes you owe, but, without income may have been unable to pay. You’ll need to agree to pay what you owe of course, but if things are still tight, you have options such as requesting installment payments or an “OIC”, offer in compromise, that lets you settle for less than you owe.
And lastly, we all are aware of the great tax break homeowners get on mortgage interest but you may be able to deduct even more if you refinanced in 2011. If you paid points or fees on your new mortgage last year, you may be able to claim them as a deduction in addition to your interest deduction.
Got a tax tip you’d like to share or a question? Tweet @carmenwongulric, #OnFile.