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18 often overlooked tax deductions & tax credits

One way to survive working on your tax return with a deadline looming -- April 18 this year -- is to make sure you don't make any easily avoidable filing mistakes.

Similarly, you don't want to overlook any tax breaks. I guess that technically omitting a tax claim could be considered a mistake, but for the sake of keeping things clear -- and for providing an added blog post topic! -- I've separated them.

James-Corden-searching-giphySearching for tax breaks? Below are 18. (James Corden GIF via

And to save you time in your search for ways to cut your tax bill in these waning filing hours, here are 18 -- in honor of the delayed filed date and this week's By the Numbers figure -- often overlooked tax breaks.

The first 10 commonly missed tax deductions and credits are from a story I updated earlier this this filing season for Bankrate. You can check out that article for more details, but here are the highlights:

1. Non-cash charitable gifts: If you gave household goods to or volunteered for your favorite charity, those actions could provide you with some added itemized charitable deductions. The value of the goods you give count, as do out-of-pocket expenses and even mileage in connection with your in-person good works.

2. Moving expenses: You can write off many moving expenses as an above-the-line deduction when you relocate to take another job. That applies to even your first job.

3. Job-hunting costs: Costs associated with looking for a new job in your current career field. This includes things like fees for resume preparation and sending it out, as well as employment or outplacement agency fees. These are counted as itemized miscellaneous expenses on Schedule A.

4. Military reservists' travel expenses: Members of the military reserve forces and National Guard who travel more than 100 miles and stay overnight for the training exercises can deduct related expenses. This includes lodging, half the cost of meals and transportation to the exercise. Again, it's an above-the-line deduction.

5. Child (and others) care credit: Uncle Sam can help pay for some of the cost of putting the kiddies in day care while you and your spouse work (or look for a job). Day camp costs also count here. And the credit applies not only to care for minor children, but also to others whom you can claim as a dependent.

6. Mortgage refinance points: Home loan rates still are remarkably low (thanks, Janet Yellen), but some folks may still pay points to get an even more affordable monthly mortgage. In those cases, you can deduct the points on your tax return for that year of your residential purchase.

7. Many medical costs: Being sick sucks. Being really ill sucks and costs big bucks. But at least in the latter case, you might have enough medical expenses to get past the 10 percent of adjusted gross income level to claim the costs as an itemized deduction. If you're close to clearing that threshold, look for some other medical costs to add, such as travel expenses to and from medical treatments, insurance premiums you pay for from already-taxed income and even no-smoking and alcohol- or drug-abuse treatments.

8. Retirement tax savings: Most folks already know that in certain cases, contributions to traditional IRAs (which can be made up to the filing deadline) are tax deductible. Those, along with money you put into a Roth IRA and/or a workplace retirement account, also could help you cut $1,000 off any tax bill you owe thanks to the retirement savers' credit.

9. Educational expenses: Uncle Sam is generous when it comes to helping fund higher education. There are the above-the-like deductions for student loan interest and college tuition and fees you paid. On the tax credit side, there's the American Opportunity Tax Credit, which offers a dollar-for-dollar tax break of up to $2,500 and possibly even more for some as a tax refund. And don't forget the Lifetime Learning Credit, which provide students -- including those done with full-time schooling but who take courses to help them get ahead at their jobs -- a credit up to $2,000.

10: Energy-efficient home improvements: If you made some relatively easy energy-efficient home improvements to your home, you might be able to get some tax savings from the Nonbusiness Energy Property Credit. This credit offers a maximum $500 saving. Remember, though, that the amount you can claim is reduced by any such credit you claimed in prior tax years; this tax break's been around in some form since 2005 and continues through 2016.

And here are eight more tax credits, adjustments and deductions that could save you even more.

11. Foreign tax credit: This is a somewhat obscure, but relatively easy option for many investors with international holdings. Basically, if you paid tax on your holdings to another country, the tax law says you don't have to pay it again on your U.S. return. The amount of foreign tax paid should be on your 1099-DIV. If the total creditable foreign tax amount is $300 or less ($600 or less if married filing a joint return), you can claim the foreign tax credit right on on line 48 of Form 1040. If your foreign tax is more than $300/$600, you'll have to fill out Form 1116 to claim the credit.

12. Excess Social Security tax credit: This is a way for folks who had too much FICA tax withheld from their paychecks. This happens when you have two or more good paying jobs in one year (we should all be so lucky!). When your combined income is more than the withholding limit, which was $118,500 in 2015 and due to low inflation remains at that level for 2016, the amount all your employers took out of your paycheck for Social Security could be too much. The only way to get it back is to claim the credit for the Social Security tax over-payments on line 71 of Form 1040. The part of FICA that goes toward Medicare, however, can't be recouped since there is no earning limit on the payroll tax for that government benefit.

13. Credit for the elderly or disabled: This tax break is available for those 65 or older or who are retired on permanent and total disability and received taxable disability income for the tax year. There are income limits and you (or your tax preparer or tax software) will have to fill out Schedule R. But the work could be worth it, as this tax credit ranges between $3,750 and $7,500.

14. Sales taxes, local and for big ticket purchases: This tax break, most beneficial for folks who live in one of the few states with no income taxes, lets you claim your state sales tax amount paid as an itemized deduction. No need to hand onto all those receipts. The IRS provides tables for each state with the average state sales tax amounts for various income levels that you can use in your Schedule A claim. But if your locality also collects a sales tax, be sure to fill out the worksheet on the Form 1040 instructions (or let your tax preparer or software do the job), or use the IRS' online sales tax deduction calculator. And definitely don't forget to claim the sales taxes on IRS-specified big purchases, such as a motor vehicle (car, motorcycle, motor home, RV, sport utility vehicle, truck, van or off road vehicle); aircraft or boat; a home (including a mobile home or prefabricated home) or a substantial addition to or major renovation of a home up to the amount of the general sales tax rate; and/or a motor vehicle leased for personal, not business, use. You might want to dig out those item's sales receipts.

15. Earned Income Tax Credit: The Earned Income Tax Credit, referred to as the EITC or sometimes the EIC, is a tax benefit for the working poor. The key word here is earned. You must make money from a job to get this tax credit, but not that much. The credit amount is calculated based on how much you make and the size of your family. But many folks without kids overlook the EITC. While it doesn't pay that much to child-free filers, you could qualify for some EITC benefits. And since it's a credit, it directly cuts what you owe the U.S. Treasury.

16. Casualty and theft losses: Dealing with a disaster is right up there with medical costs. But like doctors' bills, some casualty and theft losses might be deductible as itemized expenses. And you don't have to suffer through a major natural disaster to have such a claim. Deductible expenses on Schedule A also come from such things as a car wreck, loss of a bank account due to insolvency of the bank, and uninsured losses from a burglary.

17.  Costs related to caring for a parent: If you pay for the care for a parent and mom or dad qualifies as your dependent, you can deduct the parental assistance costs you incur. Costs of in-home care and nursing home care qualify, as do the many medical costs that older folks tend to have. In fact those doctors' bill could pay off at tax time even if your parent doesn't qualify as a dependent for exemption purposes. You still can deduct mom's or dad's medical expenses on your return as long as you provide more than half of his or her support. And that could be just what you need to meet the deduction threshold cited in #7.

18. Self-employment deductions: If you file a Schedule C, you'll find many items you can claim to reduce your self-employment income. But there are more directly on the long Form 1040 in the adjustments to income, aka above-the-line deductions, section at the bottom that form's first page. There you can deduct one-half of your self-employment taxes (that's the amount you figured on Schedule SE). You also can deduct 100 percent of the health insurance premiums you paid, as well as contributions you made to Keogh, SEP or SIMPLE retirement plans.

Some of these deductions, income adjustments and tax credits obviously apply to special filing situations. But that could be your tax circumstance. So check them out and if they work for you, claim them so that your tax bill will be at least a bit lower.

Be sure to check out other tax tips on ways to cut your tax bill. You can find them in the end-of-week tax tip roundups, as well as on  the special monthly blog page collections of tips for/from January, February, March and April.


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