Now that the tax season has officially opened up, it’s time to go through 2015 and get serious about saving money on your income tax bill. With the stress of meeting deadlines and gathering up all of the forms, you can easily overlook deductions that could lower your tax bill. To avoid this, we have compiled a checklist that will help most millennials save money during this tax season.
1. Charitable Contributions
If you spend time volunteering for an organization, and you haven’t kept track of all of your spendings, you’re missing out on an opportunity to lower your income tax payment. Regardless, if you’ve been volunteering for years or just one day, you’re eligible to deduct the expenses associated with this activity. Some of the expenses that qualify for deductions include cost for gas, parking, tolls, local public transportation, and/or required uniform. But prior to outlining a list of expenses, make sure that your organization is qualified for this deduction by IRS.
2. Student Loan Interest
If your adjusted gross income does not exceed $80,000, you are eligible to receive up to $2,500 of student loan interest paid in a given year. If you file as married filing separately or someone else claims an exemption for you, you are not eligible for this deduction.
3. Graduate School Tax Deduction
If your desired job promotion requires you to finish a few professional courses that you’d have to pay for, don’t be unwilling to invest in it. According to 212 Tax, if you’re furthering your career in a trade-related class, tax deductions are possible. Additionally, there is no limit of years that the lifetime learning credit can be claimed; therefore, you should feel encouraged to enhance your skills through higher education.
4. Expenses Incurred while Looking for a Job
If you were going through job-search this year, you may qualify for job-hunting deductions on your federal income tax return. The cache is that the job has to be in your current occupation, you don’t have a long break since your last employment, and you’re not a recent graduate looking for their first job. All of the costs related to travel, resume printing, employment agency fees can be deducted on your federal income tax return. Keep in mind, that expenses have to exceed 2 percent of your adjusted gross income. For example, if you made $40,000 last year, your deductible is $800; therefore, if you’ve spent $900 during your job-search, you’re allowed to deduct $100.
5. Tax Preparation Fees
If you’re hesitant about referring to an accounting professional to file your taxes, you’re probably not aware that expenses related to tax filing are deductible. In 2015, you can deduct the fees that you’ve paid for tax preparation in 2014. The catch is that your expenses have to exceed 2 percent of your adjusted gross income.
6. Business Use of your Home
When applying for this deduction, you will have to choose between the Simplified Option or the Regular Method. The Simplified Option doesn’t change the eligibility requirements, and it relieves you from lots of calculations and record keeping. On the contrary, the Regular Method requires you to calculate the specific percentage of your home used for business. Based on that percentage, you can deduct indirect expenses such as utilities, homeowners’ insurance, security cost, and home improvements. Additionally, same as in Simplified option, you can deduct direct expenses such as computers, printers, business phone line, etc.
7. Filing Jointly
Married Filing Jointly often leads to more deductions compared to Married Filing Separately. For instance, if you make $70,000 and your spouse makes $20,000, great difference between two incomes would bring your higher earnings to a lower tax bracket. Additionally, some tax credits strictly apply only to married couples filing jointly.
With these tax deduction tips, millennials can get the most out of their expenses. Don’t miss out on these tax saving tips when filing this year!