Are you paying the IRS more than you should?
We asked Lisa Greene-Lewis, CPA and TurboTax Blog Editor, about some of the best deductions people often overlook. Her answers might surprise you.
Are you supporting your relatives?
The recession officially ended in 2009, but the day-to-day reality for many families still includes tough financial compromises. That often means helping support family members and relatives. But did you know that those family members might help reduce your tax burden?
“Right now, a lot of people are supporting their relatives,” Greene-Lewis said. “In many cases, the relatives can qualify as dependents.”
Even if the relative doesn’t live at home, you may be able to claim a $3,800 exemption for a relative who meets all five of these criteria:
1. The person is either a relative or a full-time member of your household.
2. He or she is a citizen or resident of the U.S. or a resident of Canada or Mexico.
3. He or she did not file a joint income tax return with anyone else and cannot be claimed as a dependent by anyone else.
4. You provided over half of his or her support.
5. The person earned less than $3,800 of gross income in 2012.
Do you own your home?
Mortgage interest, of course, can be a huge deduction off of your taxes.
“It can amount to thousands of dollars for people who own a home,” Greene-Lewis said.
Don’t forget about charitable deductions.
Want to save even more on your taxes? There might be another deduction sitting right under your nose.
“Let’s say you clean out your closets or your garage, which I did last week, and you have extra household items, furniture or clothing,” Greene-Lewis said. “You can donate those items and get a deduction on your taxes.”
Wondering how to calculate the value of donated items? Find out more here: Can I deduct charitable donations from my taxes?
Bonus tip: If you volunteer for a qualified charity, you can also deduct the travel expenses related to helping that charity. Just keep a notebook in your car to log the miles you drive. You’ll be glad you did.
Other articles you might like:
Unclaimed tax refunds – could the IRS owe you?
Can I deduct charitable donations from my taxes?
Mobile apps for getting your taxes in order
The Dirty Dozen: 12 Tricky Tax Dependent Dilemmas
ShopAtHome.com’s Tax Center page