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Janice France-Pettit: Oft-forgotten tax deductions and credits to look for

Union Bank

Posted: March 10, 2012 2:00 a.m.
Updated: March 10, 2012 2:00 a.m.
 

    Most people don’t enjoy paying taxes, and to avoid owing more than necessary, it is prudent to work with a CPA or licensed tax consultant familiar with tax laws and procedures. 

Every year, many taxpayers overpay their taxes by overlooking deductions they could have claimed and tax credits available to them. 

Tax deductions reduce how much you owe in taxes by decreasing your income, and moving you to a lower tax bracket. To take advantage of deductions, a tax payer must itemize his or her tax return.

Tax credits are figured after determining tax bracket and how much is owed in taxes. A tax credit is a dollar-for-dollar reduction in the amount of tax owed, and are available to taxpayers whether they itemize or not.

Here are a few commonly overlooked tax deductions and credits:

Deduct job-hunting costs

If you were out of work and looking for a job in the same line of work in 2011, you can deduct job-search expenses. Deductible job-search costs include items such as food, lodging and transportation if your search takes you away from home, employment agency fees, postage, printing costs for resumes and business cards, etc. However, job-hunting expenses incurred while looking for your first job don’t qualify. 

Charitable expenses

In addition to charitable gifts you made during the year, be sure to keep track of smaller expenses you may have incurred while doing work for a charity. For example, ingredients for a dish you prepare for a nonprofit’s bake sale or postage you buy for a fundraising mailing count as charitable contributions.

Keep receipts, and if contributions total more than $250, you’ll need documentation from the charity. If you drove your car for the charity in 2011, be sure to deduct 14 cents per mile plus parking and any tolls paid.

Homebuyer credit

This credit expired in 2010 for most homeowners.

However, if you are a member of the armed services on extended duty outside the United States for at least 90 days during the period after Dec. 31, 2008, and ending before May 1, 2010, you may qualify for a tax credit up to $8,000.

Energy-saving credit

Although this credit has been scaled back, you still may be able to take advantage if you made energy-saving improvements to your home in 2011.

The credit is worth 10 percent of the cost of qualifying energy savers, including new windows and insulation. The maximum credit is $500 allowed on all tax returns from 2006 to 2011.

There’s also no dollar limit on the separate credit for homeowners who install qualified residential alternative energy equipment, such as solar water heaters or geothermal heat pumps.

Your credit can be 30 percent of the total cost (including labor) of such systems installed through 2016.

It is important to note that not everyone qualifies for certain tax deductions and credits. If you earned less than $49,000, you can get free face-to-face help on your tax return at IRS offices or from Volunteer Income Tax Assistance programs, and if you’re older than 60, you can get help from the Tax Counseling for the Elderly program run by AARP. For more information, visit the IRS website at (www.irs.gov).

The column is co-authored by Janice France-Pettit and Karen Smith. Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, San Fernando Valley and Antelope Valley regions. Her column reflects her own opinion and not necessarily that of The Signal. The foregoing article is intended to provide general information about tax deductions and credits and is not considered financial or tax advice from Union Bank. Please consult your financial or tax adviser. Visit www.unionbank.com for more information.  

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