Three Most Often Missed Tax Breaks

Posted April 15, 2010 by Bernz

Many Americans prepare their own taxes in order to save money and to ensure that they have a good grasp of their financial situation.  However it can be a challenge to keep current with tax law and to understand the deductions that are available.  Many taxpayers miss opportunities to save money and pay fewer taxes.

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Here are three of the most often missed tax deductions.

Non-cash Donations

It is easy to remember to claim cash donations on tax returns as receipts are issued by charitable organizations.  However many taxpayers do not remember to track the value of the goods they donate throughout the year.  Used goods donated to organizations like the Salvation Army and Goodwill can save you money in your taxes.  From the tax year 2007 forward, all noncash donations require a receipt.  Make a list of the goods that were donated and value each one.  There are several different ways to do this.  You can go into the stores and look at the prices they are charging for similar items.  You can also use programs like TurboTax’s It’s Deductible to place an approximate value on your items.  Keep in mind that the items have to be in good or better condition in order to qualify for tax deduction.

When it gets close to the end of the year, it’s always a good idea to prepare a tax estimate, outlining what you estimate your taxes owing will be on your return.  This still gives you time to do some tax planning.  If you’ve been waiting to clean out your attic or basement of unneeded goods, now is a great time to do that.

Health Insurance Premiums

Premiums that you pay on almost any health insurance plan can be deductible on your taxes.  For individuals, health insurance premiums are added to other medical expenses.  If the total medical expenses are over 7.5% of adjusted income, they can help save you money on your taxes.

For those who are self employed, the deduction is even greater.  You can deduct the premiums you pay in your health insurance directly in Adjusted Gross Income, as long as you are not covered under any other employer-based plan.

Energy Savings Home Improvement Credit

This incentive credit is an opportunity to upgrade many features of your home in order to save electricity or other energy sources.  The credit covers energy efficient upgrades including windows, skylights and insulation.  Check the IRS web site for a full list of covered improvements.  The credit allows for a 30 percent credit dollar for dollar on these improvements up to $1500 total.  The energy savings home improvement credit has been extended through to the end of 2010 and may be extended further beyond that.


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