We are heading toward a new year in less than two months. Along with New Year’s resolutions, it is time to gather the documentation necessary for tax season and complete research on relevant deductions.
Forbes reported that the standard deduction is $6,200 for single or married but filing separately taxpayers in the 2014 year. For heads of households, the deduction is $9,100 while married couples filing jointly are able to deduct as much as $12,400.
In 2014, personal exemptions are $3,950, which is slightly higher than the previous year. The refundable child tax credit is $3,000. There is also an adoption credit in the amount of adoption expenses up to $13,190.
When preparing a list of all possible deductions, there are some that you may overlook. The Kiplinger publication reminds you to remember some typical deductions or subtractions like the state sales tax, reinvested dividends, and out-of-pocket charitable deductions.
In fact, millions of taxpayers forget about reinvested dividends every year and miss out on significant savings. Forgetting about charitable donations can also occur. Actually, if you volunteer your time and resources for a charity, you may be able to write off these actions as well. For instance, if you drove your car for charity or bought any ingredients for a soup kitchen, you are able to deduct these activities. Don’t forget to document your contributions and keep your receipts!
Many do not realize that job hunting costs can also be deducted as miscellaneous expenses. Be sure to keep track of your past job-search expenses. However, these write-offs can only be completed if your miscellaneous expenses surpass two percent of your adjusted gross income. By following the tips above, you will have much greater cost savings after April 14, 2015 – the end of tax season.