It’s generally too late to take steps to qualify for new deductions and credits this year, but you can still make sure to include all the tax breaks that could help you if you haven’t filed your tax return yet. If you itemize, you probably already got the mortgage interest deduction and charitable contribution deduction. Above the line deductions like moving costs and student loan interest are also hard to miss.
But what about other potential breaks? Think back through your year, look through your bank statements and receipts, and see if you can find some of these tax breaks to help you reduce your bill. Here are five to consider:
1. Child and Dependent Care Tax Credit
If you have children under the age of 12 and had them in daycare, you might be eligible to claim a credit on some of your expenses.
Check back to see what you spent, and get the tax ID number from the childcare provider. What you actually get depends on your income and how much you paid, as well as some other factors, but you should be able to get something if you meet the requirements.
2. Earned Income Credit
Surprisingly, many people who qualify for this tax credit don’t claim it. The amount of the credit varies based on your income and the number of qualifying children you have.
However, you can get a pretty substantial credit if you qualify. Take the time to look into whether you are eligible. If you meet the requirements to claim this tax credit, it can be very valuable for you in the long run. And, because it’s a credit, it directly reduces the amount of tax you owe, rather than just reducing your income. Look into it. The time spent is worth the effort.
3. Traditional IRA Contribution
This is one of the few things you can still take care of now, even though last year is over. You have until tax day to make a previous year contribution to your Traditional IRA. If you want to reduce your income by just a little bit more, consider making another contribution as long as you didn’t max out your IRA last year.
This can be a great way to improve your long-term retirement prospects while getting a tax benefit this year.
4. Health Savings Account
If you qualify for a Health Savings Account, you can contribute with much the same rules as a Traditional IRA. This means that you have the ability to make a previous year contribution until tax day. If you didn’t max out your HSA last year, and you have some money you can put towards it, now is a good time to do so.
You can reduce your income and reduce your tax bill with the move. A deduction isn’t as beneficial as a tax credit, but it’s still worth having, as it can make a difference in the end. Plus, it’s another tax-advantaged way to put your money to work on your behalf.
5. Business Expenses
Finally, if you spent money related to your side hustle, you might be able to deduct those expenses from your income. You should be logging all business expenses throughout the year so you won’t miss any deductions, but look back through your receipts and see if you can pinpoint some business expenses from the year if you haven’t done any type book keeping last year. You might be able to reduce how much you owe by reducing your taxable income.
Have you done your taxes yet? What deductions did you claim that aren’t common? How did you learn about them?