10 overlooked tax breaks
5. Child care credit, and more
Millions of parents claim the child and dependent care credit each year to help cover the costs of after-school day care while Mom and Dad work. But some parents overlook claiming the tax credit for child care costs during the summer. This tax break also applies to summer day camp costs. The key here is that the camp is a day-only getaway that supervises the child while the parents work. You can't claim overnight camp costs.
Remember, too, the dual nature of the credit's name: child and dependent. If you have an adult dependent who needs care so that you can work, those expenses can be claimed under this tax credit.
6. Mortgage refinance points
When you buy a house, you get to deduct the points paid on the loan on your tax return for that year of purchase. But if you refinance your home loan, you might be able to deduct those points, too, as long as you use refinanced mortgage proceeds to improve your principal residence.
7. Many medical costs
Taxpayers who itemize deductions know how difficult it often is to reach the adjusted gross income threshold required before you can claim any itemized medical expenses on Schedule A. It might be easier to clear that earnings hurdle if you look at miscellaneous medical costs. Some of these include travel expenses to and from medical treatments, insurance premiums you pay for from already taxed income and even alcohol- or drug-abuse treatments.
Keep good records of all your medical-related expenses. They could help you clear this tax deduction hurdle. Changes made with the enactment of the Affordable Care Act mean that taxpayers age 65 or younger must have qualifying medical expenses in excess of 10 percent of adjusted gross income in order to deduct them.
And self-employed taxpayers take note. If you are not covered by any other employer-paid plan, for example, one carried by a spouse, you can deduct 100 percent of health insurance premiums as an adjustment to income in the section at the bottom of Page 1 of Form 1040.