Have you ever come home excited about your paycheck, only to look at the pay stub and wonder, “Where did all the money go?” Suddenly your important life goals — finishing your education, saving for retirement, or that dream vacation — feel like they’re disappearing as quickly as the taxes from your paycheck.
What if we told you that you might be able to get some of that tax money back at the end of the year?
In fact, there may be certain things you’re already doing that could get you a larger tax return. In other words, you might be eligible for some tax breaks, credits, or deductions.
Here are seven tax credits and deductions that might be able to earn you back some tax money, so that you can invest in those things at the top of your list.
- Student Loan Interest
If you are paying back student loans, and part of your monthly payment goes toward the loan interest, then you may be eligible for a tax credit! The lending company should send you a statement at the end of the year, showing how much interest you paid. You can submit that amount as a deduction on your income taxes for a credit (typically up to $2,500).
- Child Care Credit
If you are a parent who works or is in school, then pay attention here! The more dependents you have in your household, the more tax credit you’re eligible for. There are also tax credits available to help cover after-school child care, and sometimes those credits can reach up to $1,000/child.
- Earned Income Tax Credit
A lot of people usually qualify for this credit, but never realize it, and therefore, never see the benefits. If you make under $50,000 per year, then ask a tax professional if you qualify for Earned Income Tax Credit. The tax credits range in amount, capping out around $6,000.
- Mortgage Interest Payments
If you own your home and are paying on the mortgage, then the amount you’ve paid toward the mortgage’s interest may be tax deductible.
- Charitable Gifts
The more you give, the more tax credit you receive. Make sure you’re giving to official non-profit organizations, and that you collect the record of your giving at the end of the year. And don’t just limit yourself to financial giving; often you can receive a tax deduction when you donate clothing to a second-hand store like Salvation Army. Ask the store’s staff for a tax form to fill out, where you can estimate the value of your donation. Remember to submit records of your giving to the IRS at the end of the year.
- Standard Mileage
If your job requires you to drive your own car on office errands or to see clients, you may be able to receive a tax deduction for business miles. There are also medical and moving mileage reimbursement rates from the IRS. Talk with your tax advisor to find out more.
- Hobbies That Pay
If you are bringing in even a little bit of income through a hobby (i.e., selling your arts and crafts), then ask your tax advisor if you qualify for this tax deduction. In the meantime, anytime your hobby requires a purchase (i.e. more paint supplies), keep the receipt. Then, if your hobby qualifies, you can submit those receipts for a tax deduction from the income you made off of the hobby.
These are just a few of the many ways you may be able to make back some of your tax money.
WONDERING WHAT’S NEXT?
Consult a CPA, accountant, or other tax professional to figure out what credits and deductions you are eligible for. Once you find out what tax credits apply to you, start tracking and saving any necessary receipts to submit at the end of the year. After you apply for your tax credits and deductions, get your precious tax refund money faster than a paper check by setting up direct deposit on a Green Dot Prepaid Debit Card.
That college degree, new car, and retirement fund? They might not be so far off after all.