(ARA) – Every year, taxpayers miss out on hundreds or thousands of dollars in tax breaks simply because they don’t know the benefits exist.
“Figuring out what tax breaks are available, whether you qualify, and what forms you need can be tricky,” says Jessi Dolmage of TaxACT, makers of tax preparation software. Dolmage offers some tips for taking advantage of commonly missed deductions and credits:
* If you paid for child care in 2010, you may be eligible for the Child and Dependent Care Credit. Day care, pre-kindergarten, before-school and after-school programs and summer day camp for children 13 or younger qualify. The care must have been provided so that you, and your spouse, if filing jointly, could work or look for work (exceptions apply for full-time students and the disabled).
The credit amount varies based on filing status and adjusted gross income, but the maximum benefit is 35 percent of expenses for joint filers with an adjusted gross income of $15,000. Eligible expenses are reduced by dependent care benefits provided by your employer that you deduct or exclude from your income. Payment for care cannot be paid to a spouse, a dependent on your return, or to a child who will not be age 19 or older by the end of the year even if he or she is not your dependent; thus, care provider(s) must be identified on your return.
* 2010 is the last year to claim the Nonbusiness Energy Credit, worth up to 30 percent of the costs for many energy-efficient home improvements. Up to $1,500 for 2009 and 2010 combined can be claimed, but only for the year during which the improvements were made. Other green improvements like solar hot water property, geothermal heat pumps and wind energy property may qualify for the Residential Energy Efficient Property Credit.
* If you travel in order to provide services at charitable events, you may be able to take a miscellaneous deduction. Deductible expenses include transportation costs, out-of-pocket expenses for your car, taxi fares or other costs of transportation between the airport or station, and your hotel, lodging and meals. The trip should include little to no personal recreation or vacation. Be sure to keep receipts and detailed documentation.
* Be rewarded for contributing to your employer-sponsored retirement plan or an individual retirement arrangement (IRA). The Retirement Savings Contributions Credit is worth up to $1,000 for taxpayers born before Jan. 2, 1992 ($2,000 for joint filers). The non-refundable credit is a percentage of the qualifying contribution amount minus distribution amounts, with the highest rates given to lower incomes.
* If you spent money looking for a job in the same field during 2010, you may qualify for a miscellaneous deduction. Employment agency fees, resume printing and postage costs and travel to and from the area (if the travel was primarily to look for a new job) are eligible. You aren’t eligible if you’re looking for your first job or there was substantial time between the end of your last job and the time you looked for a new one.
“Affordable, do-it-yourself tax software and online solutions make getting all your credits and deductions easy and fast,” Dolmage says. “The program walks you through each credit and deduction, and completes the necessary forms. Solutions like TaxACT also guarantee your biggest refund and make getting every credit and deduction you deserve easy.”
Details about these and other 2010 tax breaks can be found at www.irs.gov. TaxACT Free Federal Edition, available at www.taxact.com, guides you through these tax benefits, and allows you to prepare, print and e-file your federal return free.
