I'm finishing up my taxes and want to make sure I don't
overlook any tax breaks I'm entitled to. What are the breaks that
people often miss?
With the tax-filing deadline coming up very soon, I'm still
getting a lot of questions from people about potential tax breaks.
Before you file, see if you're eligible for the following
deductions and tax credits.
Tax breaks for college costs.
The American Opportunity tax credit can lower your tax bill by up
to $2,500 if you spend at least $4,000 in tuition, required fees,
books and course materials for the year. It applies to the first
four years of postsecondary education. To qualify, your modified
adjusted gross income must be less than $160,000 if you are married
filing jointly, or $80,000 if you are single (the credit phases out
completely at $180,000 for married couples, or $90,000 for single
filers). The Lifetime Learning Credit applies to all years of
postsecondary education (including graduate school) and can lower
your tax bill by up to $2,000 per return. To qualify for the full
credit, your modified adjusted gross income must be less than
$100,000 if you are married filing jointly or $50,000 if you are
single. The size of the credit phases out until your income reaches
$120,000 if you are married filing jointly or $60,000 if single.
Tax Breaks and Credits for College Costs
for more information.
Extra credit for saving.
If you contributed to a traditional or Roth IRA, a 401(k) or
another retirement savings plan, you may qualify for the retirement
savers' tax credit, which can reduce your tax bill by up to $1,000
per person. To claim the savers' credit for 2011, your adjusted
gross income must be $28,250 or less if you're single; $42,375 or
less if you file your tax return as head of household; or $56,500
or less if you are married filing jointly. See
A Tax Credit for Retirement Savers
for more information.
Credit for child care.
If you have kids under age 13 and pay for care while you work, you
could qualify for the child-care tax credit. You can count up to
$3,000 in child-care expenses for one child, or up to $6,000 for
two or more children. The size of the credit gradually shrinks as
your income increases. Families who earn less than $15,000 can
claim a credit for 35% of qualifying expenses; families who earn
more than $43,000 can get a credit for 20% of eligible costs.
Expenses that count toward the credit include day care, preschool,
before-school and after-school care, summer day camp, and a nanny
or other babysitter. See
FAQs on the Child-Care Tax Credit
. You may also be able to take a credit worth up to $200 if you've
maxed out the money from your flexible-spending account to pay for
child care and you have two or more children and spent more than
$6,000 on their care. See
Claiming the Child-Care Tax Credit
for more information. Also see IRS Publication 503
Child and Dependent Care Expenses
Out-of-pocket charitable deductions.
Most people remember to deduct checks they paid to charity if they
itemize. But you can also deduct the expenses you incurred in
helping out a charity, such as the cost of ingredients for a dish
for a soup kitchen, stamps for a mailing, copying, and car mileage
(14 cents a mile). And don't forget to count any money you've had
transferred automatically from your paychecks to charity. See
Deducting Charitable Contributions
. If you move because of a job, you may be able to deduct your
moving expenses even if you don't itemize. To qualify, you must be
moving to a job at least 50 miles farther from your old home than
your old job. You can write off the cost of hiring movers (or
renting a moving truck) plus the cost of one-way travel to your new
home for everyone in your household. Deductible expenses include
airfare, train costs, or car mileage (for 2011, 19 cents a mile
from January through June and 23.5 cents a mile from July through
December). For more information see
Tax Breaks for Moving
and IRS Publication 521,
For other overlooked tax deductions, see the
Most-Overlooked Tax Deductions
7 Tips for Filing Your 2011 Taxes