VOL. 129 | NO. 53 | Tuesday, March 18, 2014
Five Tax Deductions, Credits to Consider
By Tracy Balton | Special to The Daily News
If you ask Benjamin Franklin, two things in life are certain: death and taxes.
April 15 comes every year, but you don’t have to dread it. The tax code is full of credits and deductions to help reduce your tax burden. There are so many that you should consider engaging a professional to help you file, especially as your taxes become more complicated.
Here are five popular deductions and credits to ask your accountant about in 2014.
1. Energy Efficiency Upgrades
The Non-Business Energy Property Credit is available to homeowners who made their homes more efficient by adding insulation, new doors, a new roof or even new windows. The credit has a lifetime maximum of $500 ($200 for windows), so talk to your accountant about qualifying upgrades and past claims.
If you’re putting alternative energy equipment in your home, you may qualify for the Residential Energy Efficient Property Credit. It runs through 2016 and allows taxpayers to write off 30 percent of the cost of installing things like solar water heaters or other equipment.
If you’re in school, ask your accountant about deducting up to $4,000 for post-secondary education tuition-related expenses. You can deduct this for yourself, your spouse or any dependents.
If you’re finished with school but are repaying a student loan, know that some taxpayers can deduct up to $2,500 in interest paid on student loans, given income limitations.
If you have children, look into education funds that allow parents to set aside money and have it grow tax-free.
3. Charitable Donations
It’s common knowledge that donations to 501(c)(3)-designated charities can be deducted. But there are rules. For example, deducted contributions to some groups can’t exceed 50 percent of your adjusted gross income. Additionally, you can’t write off a donation if you received something in return. So, for example, silent auction bids are not fully deductible.
In 2013, an exemption allows for a deduction of up to $3,900 per child. You may also be able to claim a tax credit of up to $1,000 per child for any dependent younger than 17.
These deductions aren’t limited to children. If you cared for an elderly parent in 2013, you may be able to deduct some expenses. Certain relatives don’t even have to live with you to qualify, as long as their income doesn’t exceed $3,900 and you provided at least half of their support.
5. Your Job (or lack thereof)
If you got a new job in 2013 and you moved more than 50 miles for it, you may be able to deduct your moving expenses. This deduction can be taken regardless of whether you itemize.
If you were unemployed in 2013, you may be able to deduct expenses like travel to interviews or employment agency fees. Unfortunately, this itemized deduction is “miscellaneous” and must exceed 2 percent of your adjusted gross income to qualify.
Tracy Balton is a CPA at Cannon Wright Blount in Memphis.