Extra money? Sign us up! Life is expensive—and the last thing you want to do is overpay on Tax Day. The good news: With a little extra effort, you ...
Life is expensive—and the last thing you want to do is overpay on Tax Day.
The good news: With a little extra effort, you could score more cash. “There are a lot of straightforward deductions that people miss,” says David Kautter, managing director of the Kogod Tax Center at American University. And while you may not be eligible for all of them, we consulted with experts to find five surprising deductions that could boost your refund by thousands of dollars.
1. Grad School
If you took any kind of coursework at a college or university within the last year, you can deduct up to $4,000 of the tuition and other related expenses. If you went back to school full-time, you could qualify for the Lifetime Learning Credit of $2,000 or the American Opportunity Credit of $2,500—credits that reduce your tax bill dollar for dollar, says Michael Gutter, Ph.D., professor of family economics at the University of Florida. Translation: If you were going to owe $6,000 in taxes, the credit could cut that down to $3,500.
2. Financial Advice
This includes any financial professional who’s helping you plan investments aimed to grow your cash. “The theory is, because the results of the advice end up as taxable capital gains, the advice doesn’t need to be taxed,” says Kautter. So that not only includes whatever your financial advisor might charge for a meeting, but also the cost of your Financial Times subscription, and computer software like Lightspeed Trader that you use to make trades.
3. Medical Bills
Even with health insurance, out-of-pocket medical costs can pile up. Fortunately, the government doesn’t believe in taxing you on what it costs to keep you healthy and alive. That includes an extra pair of glasses, laser vision correction, doctor’s visits, and even co-payments—if your insurance only covered half the cost, you can deduct as long as the grand total is more than 7.5 percent of your income for the year.
4. Job Hunting
Any costs associated with looking for a new job are tax-deductible: headhunting or resume-polishing services, membership to online job boards, travel to job fairs, and even long-distance calls for interviews. If you get an interview and have to pony up for the travel yourself, that’s tax-deductible, too. “You don’t even have to get a new job at the end of all this to qualify,” says Kautter. A couple caveats: If it’s your first job out of college, you’re changing career paths, or you’ve been unemployed for more than a year and a half or so (the rules aren’t clear on the cutoff, Kautter says) then this doesn’t apply. The rule is meant to help people advance their careers, instead of jumping into new ones.
5. Energy-Saving Home Improvements
For smaller upgrades that help make your home more energy-efficient—new insulation, a new air conditioning unit, or hot water heaters—you can qualify for a credit of as much as $500, depending on the item. Big-ticket improvements, like installing solar panels on your roof, can earn you a tax credit of 30 percent of the cost with no upper limit. And while hybrid cars have become too popular to earn a credit, plug-in hybrids and fully electric vehicles can cut your tax bill by as much as $7,500. So even if you didn’t buy environmentally friendly upgrades, it’s worth making 2013 the year you go green.
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