KNOXVILLE (WATE) – Tax season is here and some of you may be feeling the time crunch to get yours filed, with the deadline now less than three months away. When it comes to income taxes, don’t pay more than you have to. It may be tough to eke out every deduction, credit and income adjustment you deserve.
Generally, the most popular deductions, according to the IRS, are gifts to charity, home mortgage interest, tax preparation fees, medical and dental expenses. However, there are others as well.
Should you take the standard deduction or itemize? For many homeowners, mortgage interest payments along with local property taxes often add up to more than the standard deduction. The IRS says for the 2016 tax year, the standard deduction is $9,300 for heads of household, $6,300 for singles and married persons filing separate returns, and $12,600 for married couples filing jointly.
If your itemized deductions are greater than the standard deduction, leave no stone unturned hunting down legitimate items because the IRS says you’ll likely lower your tax bill. However, if you know your deductions don’t add up to that much, the standard deduction may be for you after all. Most tax-filing software lets you compare before making a decision.
Are you paying someone to watch your children so you can work or look for work? You may be eligible to claim the Child and Dependent Care Credit on Form 1040. The credit, which can cut your tax bill quicker than a deduction, also may help if you live with an elderly parent or a disabled spouse whose care must be paid for while you work.
You also may be able to claim the credit for summer day camp costs for your kids if you select a camp specifically so you can work. The credit limit is $3,000 for one qualifying individual or $6,000 for two or more qualifying individuals, the IRS says.
Depending on where your income lands, you can get a 10 percent to 50 percent credit off the first $2,000 you contribute to a qualified retirement plan such as a 401(k) or an IRA. If you’re married and filing jointly, you can claim a credit on the first $4,000 you contribute.
Did you go job hunting in 2016? If you sought a new job, but not your first job in your current field, your costs associated with the job hunt can be reported on Schedule A under “Job Expenses Deductions” even if you didn’t land a new job. The IRS says it allows these job hunting expenses: resumes, placement agency fees, and travel to look for a new job. However, your job hunting expenses together must total over two percent of your income before the deduction kicks in.