5 Things Not to Forget on Your Income Tax Returns
1. Make sure you take all the dependents that you can take. Are you taking care of a parent? Do you provide more than 1/2 of their financial support? You can take them as a dependent, even if they do not live with you. If you are divorced or separated and you have a bedroom in your home for a child that is NOT your dependent, that child qualifies you to file as Head of Household instead of Single.
2. This year, working adults get a $400 tax credit for each working adult. You can take this, even if you do not itemize. What is even nicer is that it is a direct credit to the taxes owed. It's as though somebody (namely the federal government) paid an extra $400 for each of you, towards your taxes. You must attach Schedule M. It is called the Making Work Pay Credit.
3. If you itemize, make sure you take everything to which you are entitled. Be aware of the following - Medical Expenses is limited to the amount that exceeds 7.5% of your Adjusted Gross Income. Miscellaneous Expenses is limited to the amount that exceeds 2% of your Adjusted Gross Income. There are no limitations for Real Estate Tax, Mortgage Interest, Charitable Contributions and Casualty Losses.
4. Even if you don't itemize, there are things you can take off most state returns: Job hunting expenses, expenses that you have in connection with work (not reimbursed by your employer). Do you maintain a work space in your home for yourjob? Figure out the percentage of space you use exclusively for work. That percentage of your household expenses; heat, mortgage interest, real estate taxes, etc. can be taken for job expenses. If you have children or grandchildren, take advantage of the credit that you can take off your state taxes for money you put in a college fund for these children.
5. If you request Direct Deposit of your refund, make sure you have the routing number and the account number correct. If it's wrong, it will get returned to IRS and you will have the aggravation of getting it from them.
-Article written by Certified Public Account Elsie Tarr