With tax season just around the corner, and Congress still fighting over the Bush tax cut extensions, all of us are thinking about what tax deductions might still be available to us. Well here’s 6 tax deductions anyone can take (as far as we know for now). So if you have spent money on any of these things this year, or plan to before year end, make sure you save your receipts so you can get the deduction!
1. Charitable donations
Making charitable donations has always been a great tax write-off for most folks. Giving cash of course is always a qualified charitable donation. But giving non-cash items to charity is also deductible. When you donate items to places like Goodwill, get a receipt for your donation and record what you gave, and the approximate value of each item. You’ll need to list out each item you gave with it’s value. If you’re ever deducting more than $500 of non-cash donations, you’ll need to have this type of inventory available in your records. Some people like to take digital photos of items donated as an extra protection just in case the IRS ever tries to question it. Also, if you volunteer your time for a charitable organization you can deduct mileage that you drive to, from and during your service hours. Keep track of those miles and you can write off 14 cents per mile for charitable miles driven.
2. Child care credit
If you pay for child care while you work, you may be eligible to deduct up to $6000 for the care of 2 children. You need to keep good records of these expenses, and don’t pay with cash. It’s best to have cancelled checks to prove these expenses if you ever need to.
3. Relocation for work
If you had to move because of a new job, or with your current employer, you should be able to recover some of your moving expenses if you can pass a few “tests”. The first test is related to distance traveled. Your new job has to be at least 50 miles farther from your old home than your commute from your old home to your old job was. For example, if you used to drive a 25 mile commute to your old job, then your new home needs to be at least 75 miles away from your old home (25 mile commute plus 50 miles). If so, then your move qualified for this deduction. The second test is just proving that you have been employed after your move. You have to have been employed for at least 39 weeks out of the 12 months following your move, in the vicinity of your new home. You don’t have to keep the same job for that whole time, but you must be employed during that time. If you’re self employed, then you have to work for 78 weeks in the 24 months following your move.
4. Automobile tax credits
If you buy a hybrid gas-electric vehicle, or an alternative fuel vehicle before the end of 2010, you may qualify for this tax credit. The amount of the credit varies with the type of vehicle that you buy and how fuel efficient it is. The credit can range between $400 and $4000. Some of the credit can be phased out as dealers sell a certain amount of cars. So make sure you ask your dealer before you buy. Also, the vehicle needs to be purchased for personal or business use, you cannot intend to resell it.
5. Home energy efficiency improvements
If you’re going to spend money on home improvements, make sure you go with energy efficient options. You’ll be able to deduct up to 30% of the cost, up to $1500 for these improvements. This would include things like doors, windows, insulations, skylights, metal roofing, alsphalt roofing with cooling granules, water heaters, and heating & cooling systems. I know $1500 won’t go far with these types of expenses, but every bit helps!
6. Residential renewable energy tax credits
This is a tax break for money spent on renewable energy additions to your home. This would include things like solar energy systems (including hot water heaters and solar electric systems), geothermal heat pumps, small wind turbine systems, etc. This tax credit is also for 30% of the cost, but there is no upper limit on the amount. So if you spent $30,000 on these types of systems, you could deduct $10,000! That is pretty amazing.
7. Making work pay tax credit
This is a tax credit available to anyone who has a job, and 2010 is the last year it will be available. The credit is equal to 6.2% of an individual’s earned income up to a maximum amount of $400, or $800 for a married couple. This amount will be reduced by any economic tax recovery credit that you may have already received. It also starts to get phased out if you’re an individual making over $75,000 or a married couple making over $150,000. It’s not a lot, but it helps!
Don’t ever think that tax credits and write-offs are only for the rich. All you have to do is donate, go to work, or go green, and you can get some money back from Uncle Sam.