When tax time rolls around many people often neglect tax deductions that can help them save money. For starters, sometimes people choose to take the easy way out and just allow themselves to get the standard deductions because it is much easier and less work. Three deductions that many people neglect are explained below.
Dividends that are Reinvested are more of an added subtraction than a tax deduction. If you are a person that invests money then each time that you reinvest your money in extra shares your tax basis increases in the fund and lowers the amount of taxable capital when your shares are sold. If you are one of those people that forget to include the reinvested amounts in your cost basis and you are subtracting from those proceeds of sale to decide your gain, you are essentially over paying your taxes.
Interest Paid on Student Loan is also deductible. If you are a parent that is paying the interest on your childs loan then you are entitled to this deduction. The law use to state that if you were the one that received the loan, then you are the one that must pay the loan but now there is an exception to that law. If you the parent are paying off the loan, the law sees this as if you are giving the money to your child in order to pay off their loan. So, even if the child is not claimed as a dependent can still qualify for a $2500 deduction on their student loan interest that was paid by a parent.
Dependent and Child Care is a tax credit that unbelievably so many people miss out on. This tax credit lessens the amount that you owe dollar for dollar. If you have a reimbursement account through your job you can still claim up to $4800. If you dont have a reimbursement plan at work and you pay straight out of your pocket then you need to determine how much can be used as a tax credit and if it applies to you then this is a great tax credit to take advantage of.
Just make sure you do good tax preparation to claim all the deductions you can during tax time. This is vital because without proper preparation you can waste time, money, and make mistakes which can cost you in the long run. Take your time and get everything correct and you will maximize your tax return.