Don’t Miss these Tax-Saving Tips

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If you have not yet gotten around to filing your 2016 taxes, below is a list of some of the most often overlooked tax write-offs. Use these tips to potentially cut your tax bill and keep more money in your pocket.

We’ll start with a Win Win favorite – charitable contributions:

Out-of-Pocket Charitable Contributions

It’s hard to overlook the big charitable gifts you made during the year by check or payroll deduction. But the little things add up, too, and you can write off out-of-pocket costs you incur while doing good deeds. Ingredients for casseroles you regularly prepare for a nonprofit organization’s soup kitchen, for example, or the cost of stamps you buy for your school’s fundraiser count as a charitable contribution.

For a list of local charitable non-profits, please click here to see the folks on our list.

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State Tax Write-Offs

This write-off is primarily for those who live in states that do not impose an income tax. You must choose between deducting state and local income taxes, or state and local sales taxes. For most citizens of income-tax states, the income tax deduction usually is a better deal. IRS has tables for residents of states with sales taxes showing how much they can deduct. But the tables aren’t the last word.

Union Dues

If you belong to a labor union and you pay dues every year, deduct them.

Student Loan Interest Paid by Parents

In the past, if parents paid back a student loan incurred by their children, no one got a tax break. To get a deduction, the law said that you had to be both liable for the debt and actually pay it yourself. But now there’s an exception. If Mom and Dad pay back the loan, the IRS treats it as though they gave the money to their child, who then paid the debt. So a child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by Mom and Dad.

First Jobs and New Jobs

While job-hunting expenses incurred while looking for your first job are not deductible, moving expenses to get to that first job are. And you get this write-off even if you don’t itemize. If you moved more than 50 miles, you can deduct 23 cents per mile of the cost of getting yourself and your household goods to the new area, (plus parking fees and tolls) for driving your own vehicle.

Costs associated with looking for a new job in your current occupations are tax-deductible. This includes fees for resume preparation and employment of outplacement agencies.

Child and Dependent Care Tax Credit

It’s easy to overlook the child and dependent care credit if you pay your child care bills through a reimbursement account at work. This is a tax credit which will reduce your tax bill dollar for dollar, so do not miss it.

Earned Income Tax Credit (EITC)

Twenty five percent of taxpayers who are eligible for the Earned Income Tax Credit fail to claim it, according to the IRS. Some people miss out on the credit because the rules can be complicated. Others simply aren’t aware that they qualify.

The EITC is a refundable tax credit – not a deduction – ranging from $506 to $6,269 for 2016. The credit is designed to supplement wages for low-to-moderate income workers. But the credit doesn’t just apply to lower income people. Tens of millions of individuals and families previously classified as “middle class” – including many white-collar workers – are now considered “low income” because they:

  • lost a job
  • took a pay cut
  • or worked fewer hours last year

If you were eligible to claim the credit in the past but didn’t, you can file any time during the year to claim an EITC refund for up to three previous tax years.

State Tax Paid Last Spring

Did you owe taxes when you filed your 2015 state tax return in 2016? Then remember to include that amount with your state tax itemized deduction on your 2016 return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments.

Refinancing Mortgage Points

When you buy a house, you get to deduct points paid to obtain your mortgage all at one time. When you refinance a mortgage, however, you have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points a year if it’s a 30-year mortgage—that’s $33 a year for each $1,000 of points you paid.

Cleaning Up

Cleaning and laundering services when traveling are deductible as long as they aren’t reimbursed by your employer.

 

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Spring is the Time of Plans and Projects

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Enhancing your home’s curb appeal is a win-win investment. You get the pleasure derived from owning, and returning to, a visually-appealing home tailored to your tastes. It is also a great return on investment, as it will attract more potential buyers if you decide to sell. As we discussed last week, you can do amazing remodels and upgrades in the home’s interior, but if it lacks curb appeal, chances are they will never be seen.

Adding or enhancing curb appeal can be a fairly easy and affordable project that can be undertaken in a weekend or just a few hours. And, as we just mentioned, the return on your investment is huge. Below are some fixes to your home and yard that will add lasting value to your home.

Replace hardware
These are quick changes that can make an immediate improvement. House numbers, the entry door lockset, the mailbox, the door knocker, and light fixtures are all elements that can add style and interest to your home’s exterior curb appeal.

If they’re out of date, replace them. If they are weather-worn, a thorough cleaning or fresh paint can make a huge difference. These elements add the most appeal when they function collectively, rather than as mix-and-match pieces.

Refresh the front door
A peeling or worn front door can be a serious deterrent to potential buyers. This is an inexpensive project that can be finished in just a few hours and make a huge positive impression for both the returning homeowner and buyers. Repaint the door, or personalize it with a color that matches the rest of the exterior. The current trend seems to be a contrast between the front door and the home’s façade. Be sure to check with your Home Owners’ Association, if applicable. 

Exterior facelift
New paint, siding, or trim details automatically transform the look of a home. Periodic maintenance of that exterior surface is the most affordable way to maintain the aesthetic of the home. Obvious defects, such as cracked material or missing elements, can quickly turn away potential homebuyers. Another option is to add or refinish shutters to update the appearance of the home.

Plant, plant, plant
Perhaps one of the most rewarding and personal ways to increase curb appeal is lawn maintenance. Your home will look neater and well-cared for with consistent mowing, edging, and fresh mulch in the foundation planting beds.

Window boxes offer a fast, easy way to bring color and charm to your home. Choose boxes made from copper or iron for a traditional look, or paint wooden boxes to match the home’s appearance.

Consider brightly colored annuals in the spring and summer and plant flowers with autumn hues in the fall.For instant change, purchase flats of already inbloom like pansies, Black Eyed Susans, Impatiens, and Petunias. They grow quickly, bloom for longer, and are inexpensive.

Make it shine
One final and virtually free (except for the elbow grease) way to bring positive attention to your home –sparkling clean windows show a house is well-cared for and maintained.

What are your plans for an exterior refresh this spring?