In all the complexity of tax preparation, it is easy to miss a deduction or credit. This is a particular advantage to utilizing a professional tax service because they ask all the questions you may otherwise overlook. Here is a look at some of the most commonly missed deductions and credits.
Tuition and Fees Deduction or Education Credits
Under most circumstances you may not miss these tax breaks; however, when people pay tuition with a student loan, particularly one sent directly to the school, it is easy to misunderstand the timing of claiming the deduction or credits. The truth of the matter is that these are claimed at the time the tuition is paid, even if it is paid with loan proceeds.
Moving Expense Deduction
Here is another one easily overlooked. The primary reason this deduction is forgotten is because it is not one that can be claimed every year and does not amount to a huge amount of money. However, every little bit helps. If you move for the purpose of obtaining new employment or your current position relocates you, you may be eligible to claim the expenses associated with the move as a deduction.
Medical and Dental Expense Deduction
Unless you have a lot in medical expenses, you typically will not benefit much from the medical and dental expense deduction. However, you may be overlooking a major medical expense every year. Does your employer provide your health insurance? How about your family? A lot of employers will pay for your insurance but require you to pay for your spouse or family coverage, because this amount is automatically deducted from your paycheck, you may forget that it is paid every year and is a deductible medical expense, if, when coupled with your other medical and dental expenses exceeds 7.5% of your adjusted gross income.
Child Tax Credit
Typically, if you have children, you are going to squeeze out every deduction and credit you can out of your tax return. However, because it is so complicated to calculate, many people are intimated by figuring the child tax credit. Also, it is not as well known as the earned income credit; so, a lot of people will not know they can even claim it. The additional child tax credit is often under-claimed for this reason as well. If someone even knows to see if they qualify for the child tax credit, they may not realize that although they may not claim the full child tax credit, they may be eligible for the additional child tax credit. In this instance, a lack of education can be very expensive.
Each of these reasons is the motivation to seek professional tax preparation. Particularly, tax software that prompts you to enter information is the most useful in catching all of the extra, easily overlooked deductions and credits.