As you prepare to do your taxes, there’s really only one question that you have for your tax preparer. “How do I get the greatest deductions, thereby saving the most money?” To help answer that “million dollar” question, we’ve combed the Internal Revenue Service (IRS) website at www.irs.gov and asked CPA Jeff Haywood of Jeff Haywood Taxes to help us compile a list of tax write-offs designed specifically for our ESSENCE.com readers.
These tips show you how to file your taxes, take advantage of little known tax breaks and get the most out of your money.
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Use free IRS software to file your taxes. Go to IRS.gov/FreeFile. This website will allow you to choose a company that will help you prepare your federal tax return.
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Get FREE tax preparation. The VITA program is for military families and people earning less than $53,000 annually. The TCE program is for ages 60 or older.
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Use IRS e-file. The Internal Revenue service says that it is accurate, easy, convenient, safe and secure. This method gives you the added benefit of getting your refunds faster.
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Consider taking the itemized deductions rather than settling for the standard deduction. Itemize mortgage interest, state income tax, real estate taxes, charitable contributions, investment expenses, unreimbursed employee expenses and taxes on auto purchases.
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Save double with the Retirement Savings Contribution Credit. For low to moderate income workers, you can save for retirement while getting a tax credit this year.
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Child daycare can be rough on your budget. But there’s light at the end of the tunnel. See Publication 503 on credit you can get on children under age 13 among others.
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If you were in the low income bracket for 2014, be sure to check to see if you qualify for the Earned Income Tax Credit. Individuals with or without children can be considered.
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You can get as much as $1,000 per qualifying child that resides in your home with the Child Tax Credit. Even a full-time student may qualify. See Publication 972.
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Remember to take all possible deductions on your second home in addition to the mortgage interest and real estate taxes to write off on your primary home.
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You might just qualify for residential energy tax credits on efficiency improvements like exterior windows, insulation and heating and air conditioning. See Form 5695.
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Your student loan payments might be stressing you out. But you may be able to get some relief with the student loan interest deduction. See IRS Publication 970.
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Parents can take advantage of two education tax credits for their children in college. They are called The American Opportunity Tax Credit and Lifetime Learning Credit.
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All of your dedication to your students as a teacher is not for naught. Take up to a $250 deduction for classroom supplies and materials purchases. Write off $500 for a couple.
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As a self-employed person, look into Section 179. This depreciation or bonus depreciation allows you to write off the cost of equipment bought and used during the year.
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If you are self-employed, take advantage of the tax deduction on your health insurance. It includes medical, dental or long-term care premiums for you and your dependents.
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Write off home office expenses if this locale is utilized regularly and exclusively as your place of business or a meeting space for clients, customers or patients.
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If you are self-employed and have an office space, you can deduct your rent and office expenses such as utilities. If you own the business, deduct mortgage interest and taxes.
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Utilizing your personal automobile for business expenses can prove quite costly. Use the standard mileage of 56 cents per mile to deduct your travel expenses.
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You can deduct 23.5 centers per mile for medical or moving purposes. You can also write off 14 cents per mile for your service to charitable organizations.
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Gifts galore. You can write off gift purchases of up to $25 per person, per year for business relationships that you have.
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Taking your client out on the town is cool. Meals and entertainment can be deducted up to 50% of the expenses. Document the amount, date and purpose of the event.
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As a business owner, take advantage of the Work Opportunity Credit by employing individuals like qualified veterans, felons, long-term assistances people and youth.
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A little known tax savings incentive is the Credit for Increasing Research Activities. Use from 6765 to claim this credit.
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To your health. You must have health insurance known as “Minimum essential coverage”, a coverage exemption or make a shared responsibility payment on your return.
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Ask about the Premium Tax Credit. This advanceable, refundable incentive is for low to moderate income families to get insurance through the Health Insurance Marketplace.
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You can deduct state and local taxes that were imposed on you in the year. Your choice is either state and local general taxes or state and local income taxes. Not both.
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When you reimburse your employees for their car and truck expenses, you don’t have to shoulder the cost. Write-off on this one. See chapter 11 of Publication 535 for details.
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You can deduct unique types of pay to your employees like education expenses, property you transfer as payment and loans that you do not expect them to repay.
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We don’t all get it right every time. You can write off any fines and penalties you have to pay for nonperformance or late performance of an agreed upon business contract.
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You can deduct advertising expenses that are directly related to the activities of your business. Additionally, you can do “goodwill” advertising for future business
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