5 Tax Breaks Often Overlooked
April 15th is the day Jackie Robinson made his debut in major league baseball. April 15th is also the day Tokyo Disneyland first opened its doors. But to many of us, April 15th is the deadline for submitting tax returns. As always, it is best to do your research or hire a tax professional to help you capitalize on as many tax breaks as possible and keep much of your hard earned money in your pocket. And here are 5 commonly overlooked tax breaks available if you decide to itemize deductions and have the records to prove it:
1. Child Care Credit for Adult Dependents
Yes, this credit is for the paid care of a child under the age of 13 that enables you to go to work, but this credit can also be claimed by those with an adult dependent.1 If you are paying for the day care of an adult dependent who lives with you and who is mentally or physically incapable of self-care, such as an aging parent, you may be eligible for the child care credit.
2. Hobby Expenses
Have you earned income for doing something for fun? A hobby is defined as something that you do for fun but if you managed to squeeze income from it, you may be able to deduct the expenses of that hobby (up to the amount you earned from the hobby last year).2 For example, if your handmade yeti-shaped oven mitts are a big hit at the local craft fair, you may be able to deduct the cost of fabric and packaging as a miscellaneous itemized deduction.
3. Gambling Losses
It’s no secret that Las Vegas is considered the unofficial 9th Hawaiian island, so it is likely that you or someone you know vacationed on the Vegas Strip or Freemont Street last year. There is a gambling loss deduction3 but it does not mean the government will pay you to lose money at the poker table. The amount of losses cannot exceed the gambling income you report and if you do choose to claim this deduction, you must provide definitive paperwork such as receipts, tickets, statements or other records that show the amount of losses.
4. Taxes You Paid Last Year
If you were among the unlucky citizens that ended up owing state taxes last year, then you might be able to claim the state income tax you paid as an itemized deduction.4 Hopefully what you owed the state last April 15th will give you a break this coming April 15th.
5. Tax Preparation Expenses
You can claim the expenses of the person or software that is helping you to find these deductions!5 Keep the bill from your tax professional or that receipt from the tax preparation software and you may be able to claim it as a miscellaneous itemized deduction.