It’s true, the older you get and the more complicated your life gets, the more tax breaks you can claim on your tax return. But just because you’re young doesn’t mean you don’t qualify for tax deductions, credits, and other breaks.
It’s time to get going on your federal tax return. And whether you’re still single or have already tied the knot, be sure to double check to see if you qualify for any of these common tax breaks this year:
1. Charitable Gifts and Volunteer Expenses Deductions
If you itemize deductions, you’re probably well-aware that you can deduct monetary gifts to charity. But did you know you can also deduct any expenses you incur doing charitable work? You can’t deduct a particular value for the hours you spend volunteering, but you can deduct use of your car if you drive to and from volunteering (14 cents per mile), or any supplies you buy for a volunteer cause.
2. Moving Expenses Deduction – Even for College Graduates
If you move at least 50 miles to take a new job, you can write off a lot of the expenses you’ll incur during the move. This goes for recent graduates taking their first job, too! The job just has to be at least 50 miles from your previous address.
3. Travel Costs for Military Reserve and National Guard Deduction
Military reservists and National Guard members can deduct certain travel expenses for service and training that is more than 100 miles away. You don’t have to itemize to claim this deduction—just complete IRS Form 2016. You can deduct 50.5 cents a mile, lodging, and half of your meals while on military drills.
4. Mortgage Points Deduction
Most people know you can deduct the interest you pay on your mortgage. Because mortgage points are essentially prepaid interest charges, you can deduct any points you pay at closing, too. More great news if you bought a house last year. You can also deduct a portion of points you pay if you refinance or purchase a second home, but read up on the details or consult a tax professional—those points must be deducted in small pieces each year as you pay down the loan (like regular interest).
5. Retirement Savings Credit
You may already know that you can make certain contributions to a traditional IRA or employer-sponsored 401(k) plan tax-free, but taxpayers with smaller incomes may qualify for an additional retirement savings tax credit. Read more about the retirement saver’s tax credit.
This credit lets qualifying taxpayers get a tax credit for 50 percent of up to $2,000 that you contribute to any retirement savings plan (401k, or traditional or Roth IRA). So if you did contribute $2,000, you wouldn’t just get to adjust your income by the $2,000 you contributed, you would also get a $1,000 credit towards any taxes you owe. To qualify, you must earn no more than:
- $26,000 or less if single, married filing separately, or qualifying widow(er).
- $39,000 if head of household.
- $52,000 if married filing jointly.
6. Education Expenses Deductions
If you were an adult and went back to school—full- or part-time—in 2008, you may qualify for one of two credits. You can choose to deduct tuition and fees you paid, up to $4,000 or take the Lifetime Learning Credit, which provides up to 20% off of tuition you paid up to $10,000…in other words, up to a $2,000 credit.
The $4,000 deduction would be a reduction in your taxable income, but the Lifetime Learning Credit would be up to $2,000 that comes straight off of what you owe in taxes…be sure to test both options to see what works best.
Ready to start your federal tax return? Prepare your taxes online, for free, with TurboTax’s Federal Free Edition.