Filing your income taxes can be a confusing process, but it’s all worthwhile when you deposit that tax refund. To make sure you get as much money back as you can, consider these five common deductions, which may decrease your taxable income and potentially lead to a larger tax refund. Check with a tax professional to to find out how you can make the most of your refund potential.
1. Costs From a Job Change
If you’ve spent money on job-hunting in 2018 (job hunting expenses might include resumé preparation and printing, travel, as well as other costs), you may be able to deduct those costs. The catch is that you have to itemize the expenses, so make sure you have your receipts. If you had to relocate for a new job in 2018, you can sometimes also deduct moving costs, as long as you weren’t reimbursed by your employer.
2. Education Expenses
If you attended a college or institution this year, the Lifetime Learning Credit can help you cut down on your tax bill. The credit is worth up to $2000, although there are income limits, so be sure to check if you meet those requirements. This deduction is beneficial for both young college students and older adults who are looking to boost their training and education.
3. Student Loan Interest
If you’ve been making payments on your student loans, you can deduct some of the interest you’ve paid. There are a few conditions you must meet to qualify, but for many former students, deducting this interest can really move the needle on that tax refund. Better yet, you don’t need to itemize these deductions.
4. Side Businesses and Self-Employment
The self-employed are eligible for several tax deductions. Expenses you can deduct could include advertising, website related costs, publications, job-related vehicle mileage, job-related travelling, memberships, and office supplies. You may even be able to deduct a portion of your residence expenses (rent, insurance, utilities) if you have a dedicated home office and qualify under the rules.
5. Charitable Donations
Taxpayers can usually deduct charitable donations, both those made by cash or check and contributions in the form of clothing or other goods. Most donations to charitable nonprofit organizations, like the Red Cross, Salvation Army, or even your local church, are tax deductible. Even small donations can add up to a substantial amount over the course of the year. Review your charitable gifts to find out how much you can deduct.
Charitable donations and the other options listed are just some of the most common deductions that people use to reduce their taxable income. Keep them in mind as you prepare your tax return, and you may be able to increase the size of that much-anticipated refund.
*Although we are a debt collector, we are providing these helpful tips because we care about consumers and their general financial well-being. Midland Credit Management does not offer financial advice. If you have questions or concerns about your personal finances, please speak to a financial advisor.