(NEXSTAR) – Tax season is right around the corner, and with the New Year, you may already be receiving some of your tax documents.
If you’re preparing to file your tax return, you won’t want to miss some of these oft-forgotten tax deductions and credits.
Deductions can reduce the amount of your income before calculating the tax you owe, explains the Internal Revenue Service. You may also be eligible for tax credits, which can reduce the amount of tax you owe or increase your tax refund.
Instead of deducting income tax, you can choose to deduct state and local general sales taxes. In most cases, you can do this if the tax rate in 2021 was the same as the general sales tax rate, according to the IRS.
Medical and dental expenses
You can deduct medical or dental expenses you paid for yourself, your spouse, and your dependents if the amount of your total medical expenses exceeds 7.5% of your adjusted gross income, reports the IRS.
“Medical care expenditures include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.”
If you are a teacher, you can deduct up to $250 of any unreimbursed expenses for classroom materials such as books, supplies, computers, or other equipment used in your classroom.
Money or property you donated to certain groups – religious organizations, government for public purposes, non-profit schools and hospitals, veterans groups, and many other organizations – can be deducted as charitable contributions , according to the IRS.
Generally, you can deduct the fair market value of your contribution, but in most cases your contribution cannot exceed 60% of your adjusted gross income.
Work at home
If you are self-employed or a partner and work from home, you may be able to deduct certain expenses. The IRS explains that if you regularly and exclusively use your home as your principal place of business or to meet with patients, clients, or clients, you may qualify for this deduction.
You may also qualify if you use part of your home as a warehouse for inventory or product samples, as a rental or as a daycare. The use of a separate structure not attached to your home may also qualify.
The part of your home used for business purposes cannot be used for personal purposes, reports the IRS. More details here.
Drive for work
Speaking of work, have you been to the office this year? It could be a radiation.
If you use your car for business and personal purposes, the IRS says you can deduct the cost of using it for business purposes. This can be done by calculating the standard mileage rate method or the actual expense method.
You are required by law to support your expenses with records or with sufficient evidence to support your claim, according to the IRS.
Child tax credit
Perhaps one of the best-known tax credits this year is the second half of child tax credit payments. The federal government recently launched a revamped website to help determine if you qualify for the credit.
For more information, click here.
Driving an electric vehicle
Have you been to work (or elsewhere) in an electric vehicle? If your vehicle meets specific requirements, you could benefit from a tax credit.
Under Section 30D(a), the IRS explains that you can receive the plug-in electric vehicle credit if you purchased a car or truck that has at least four wheels, weighs less than 14,000 pounds, and uses the energy from a battery with at least 4 kilowatt hours rechargeable from an external source.
You must have purchased the vehicle in or after 2010 and started driving it the same year you claim the credit, according to the IRS. When the manufacturer sells 200,000 qualifying vehicles, the credit begins to disappear for that manufacturer.
Energy efficient home improvements
If you have certain energy-efficient aspects of your home, you could receive a tax credit. Electric heating and solar water; small wind power; geothermal heat pump; biofuel; and fuel cell ownership costs are eligible for Form 5695.
The form is for energy efficient noncommercial and residential real estate loans, the IRS explains.
Eligible adoption expenses may entitle you to a tax credit and income exclusion for employer-provided adoption assistance.
According to the IRS, expenses include reasonable and necessary adoption expenses; court costs and attorney’s fees; Trip costs; and other expenses directly related to the adoption of an eligible child.
More details here.
This year’s tax filing season started on January 24 and Tax Day has been moved to April 18. Here’s what else you need to know before you file your 2021 tax returns.