10 Most Commonly Overlooked Tax Credits and Deductions

April 14, 2010

It’s tax day tomorrow. (You knew that already, right?) Are you sure you’re getting all the deductions and credits that you’re eligible for in 2009? For example, did you do a renovation or improvement to your house this year? Did you know that if you made energy-efficient changes, you can take off a portion of that cost on your taxes? For us, because we bought the most energy-efficient doors and windows possible–and saved the receipts–we are able to get the full $1,500 tax credit on our 2009 income tax return, courtesy of the American Recovery and Reinvestment Tax Act of 2009 . Unfortunately, we are likely the exception, not the rule, when it comes to credits and deductions.

According to Jackson Hewitt Tax Services, many Americans miss out on hundreds of dollars in potential credits and deductions by simply neglecting to include them on their tax returns. Here are the 10 most commonly missed tax deductions and credits:

1. Education: student loan interest payments (up to $2,500 for payments made in 2009); parents with a qualifying child in school can also claim the Tuition and Fees Deduction, if they meet the eligibility requirements.

2. New Car: sales tax paid to buy a new vehicle is deductible (phases out for high income earners), regardless of whether you itemize deductions or not.

3. Work: professional journals, magazines, and newspapers; required uniforms and work clothes not suitable for street wear; dues to professional organizations; and business expenses; also, through the Self-Employed Health Insurance Deduction, those who were self-employed during 2009 can deduct up to 100 percent of medical insurance costs for themselves and their families.

4. Real estate: the first $500 (or $1,000 if married filing jointly) of real estate taxes paid can be added to your standard deduction, or you can deduct all real estate taxes paid if itemizing deductions.

5. Medical: crutches, canes, orthopedic shoes, hearing aids, eye glasses, contact lenses; hospital fees for services such as nursing, physical therapy, lab tests, and x-rays, if you spent over a certain amount

6. The Earned Income Tax Credit: Changes to this credit for tax year 2009 include a new provision to allow those with three or more children a chance to qualify for up to $629 in additional credit, as well as increases in the amount of the credit and the income limits to qualify.

7. The Child Tax Credit: Taxpayers can claim up to $1,000 for each qualifying dependent child who was under age 17 at the end of 2009.

8. The Additional Child Tax Credit: Taxpayers who earned $3,000 or more and have dependent children under the age of 17 at the end of 2009 may qualify for a refundable credit up to $1,000 per child.

9. The American Opportunity Tax Credit: This covers up to $2,500 (with 40 percent refundable) of qualified tuition and fees or related higher education expenses, such as books and software; the student must be enrolled in a qualifying institution for at least half-time, in one of the first four years of his or her post-secondary education.

10. Adoption Credit: Those who adopted a child and paid adoption expenses in 2009 may be able to take a credit for qualified expenses of up to $12,150 per child.

Also, if you work and send your child under 13 to camp during the summer, make sure you get that camp’s tax ID number and include it as part of your child-care costs, which are deductible.

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4 Responses to 10 Most Commonly Overlooked Tax Credits and Deductions

  1. suburbangrandma on April 15, 2010 at 6:33 pm

    Wow…sorry, I just realized I misspelled “linked”…that’s what happens when the brain is already in a sleep mode and the fingers are still going…lol
    Here is my post with a link to yours:


  2. Tax Season – Helpful Hints on April 14, 2010 at 11:03 pm

    […] if you are still searching for credits to lower the amount Uncle Sam wants from you, Leah at Suddenly Frugal, is coming to your rescue, by providing some quick tips, so check them […]

  3. Leah Ingram on April 14, 2010 at 5:58 pm

    Cool. Share a link when it posts.

  4. suburbangrandma on April 14, 2010 at 5:14 pm

    Great post!
    I just wrote a short post for tomorrow, April 15th and liked to yours.

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