It’s tax time
The world may not have ended on December 21, as was inferred from the Mayan calendar but, come April 15, the IRS still expects you to file your 2012 tax returns. So, if you are one of those taxpayers putting W2 forms together and compiling all the paperwork needed to file, be sure to use all the tax reduction strategies available to you.
The expenses you incurred while doing charitable work are deductible. For example, if you used your car to carry out the work, you can deduct up to 14 cents a mile. You also can claim supplies you bought for the charitable endeavor.
If you spent any time looking for a job, the costs associated with that search could be deductible. This applies even if you are currently employed. The exception would be college students seeking their first job. Examples of deductible costs include resume preparation fees and outplacement agency costs.
Be aware, however, that the total value of these costs, along with certain other itemized costs, must exceed two percent of your adjusted gross income before they can be claimed.
The Child and Dependent Care Credit helps cover the costs of after-school day care for your child or children, but, did you know you can also claim the costs of summer day camp? The proviso is that the summer camp is for day camp, not overnight camp costs. Also, if you have adult dependents who need care so you can work, those expenses also can be claimed.
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Medical costs are a reliable source of deductions if the taxpayer can reach the 7.5 percent threshold of adjusted gross income. Self-employed taxpayers, who are not covered by other employer-paid plans, can deduct 100 percent of their health insurance premiums.
Moderate- and low-income taxpayers can claim tax savings for contributing to a retirement account, such as an IRA or a workplace retirement plan. The Retirement Savings Contribution Credit offers a tax savings of up to 50 percent of the first $2,000 you put into such accounts. This could result in a $1,000 tax credit for you. Eligibility is based on your adjusted gross income. The income limits to qualify are $57,500 for married filing jointly, $43,125 for head of household filers and $28,750 for single filers or married filing separately.
Don’t forget to investigate various education credits that offer tax-saving options, including the Lifetime Learning Credit and the American Opportunity Tax Credit. Some filers will be able to claim up to $4,000 through various education credits.