As the end of 2014 approaches and you start getting all of your tax information in order you may be looking for additional ways to put a little extra money in your pocket this year. Sure we all know the big deductions like property taxes, donations and both state and sales tax but what about the ones that are commonly overlooked but can end up meaning more money for you and less for the IRS? Let’s take a look at a few tax deductions for families that you may not have known could save you money.
Student Loan Interest Paid by Mom and Dad
If a parent pays back their child’s student loans the IRS treats it as that parent giving the money to the child who then uses it to pay the loan back. The key to making this deduction possible is that the child is no longer claimed as a dependent. The child can then deduct up to $2,500 of the loan interest that was paid by Mom and Dad each year. Unfortunately Mom and Dad don’t get the same benefit even though they are the ones paying. They can’t also use this deduction because they are not the ones liable for the debt.
Job Hunting Costs
If you were one of the millions that spent some time in 2014 looking for a job we hope that you were able to obtain one. . . and that kept track of (or can reproduce) your job search expenses. With the number of unemployed Americans in the millions this little known tax deduction for families can come in handy. If you were looking for a position in the same line of work as your current or most recent job, you can deduct certain expenses as miscellaneous. Here are some examples of what can be deducted:
- Transportation expenses (56 cents a mile for driving your own car and tolls)
- Food and lodging for searches away from home
- Cab fares
- Employment agencies
- Printing resumes, business cards, advertising, etc.
Child Care Credit
This one isn’t technically a deduction but it is a credit which is even better! A credit reduces your tax bill dollar for dollar. You can qualify for a tax credit worth 20%-35% of what you pay for child care while you are working. The children need to be under the age 13 in order for this credit to count.
Tax Preparation Fees
In an article written by Dan Caplinger he mentions tax preparation fees as one of 3 little known tax deductions. (The article can be found here). Although this article was written for last tax season the same information can be carried through to this year.
Hopefully this post helped you find some tax deductions for families that you were unaware of before. What are some deductions have helped you out in the past that aren’t common public knowledge?