5 Key Tax Breaks
Taking the standard tax deduction isn't always best. In some cases, itemizing can yield a bigger refund, so don't neglect these tax breaks.
Job-Hunting Costs: Searching for a new job (hello, LinkedIn!) allows you to deduct costs incurred for employment agency fees, professional résumé prep and travel expenses if a trip's purpose is mainly to look for work, says Jill Schlesinger, CBS News business analyst. The catch for tax breaks: You must have looked in your current field—those aiming to switch careers or re-enter the workforce after a long break won't qualify. (And no, you don't need to actually get the job.) Claim costs as miscellaneous deductions.
Tax Prep Fees: Whether you paid a professional to prepare and file your return or bought tax software in 2015 to expedite filing your 2014 taxes, those costs can be deducted under your miscellaneous expenses this year, according to attorney Barbara Weltman, author of more than 25 books.
Out-of-Pocket Medical Expenses: Recoup some of your family's medical and dental costs by deducting doctor fees, smoking-cessation treatments, prescription drugs and travel expenses for medical care, says tax research specialist Kristin Siolka. Expenses must be itemized and have to exceed 10% of your Adjusted Gross Income (AGI) if you are under 65.
Charity Work and Donations: Think outside the box of clothes you dropped off at Goodwill. On charitable deductions, you can count out-of-pocket expenses such as grocery-store ingredients for anything you make for a fundraising bake sale or the miles you drove while volunteering (currently 14 cents per mile according to IRS rules). The charity must be a recognized 501(c)(3) organization, says Schlesinger. You must keep related receipts or canceled checks, and if the deduction is $250 or more, you'll need an official letter from the charity as proof.
Your Child's College Degree: If you have a kid in college, you may qualify for the American Opportunity Tax Credit, up to a $2,500 credit toward qualifying higher education expenses, or the Lifetime Learning Credit, up to a $2,000 credit toward undergraduate, graduate and professional degree courses and fees. Just be aware that double-dipping is prohibited. "You can't claim more than one tax break for the same student in the same year," says Manisha Thakor, director of wealth strategies for women atthe BAM Alliance.
Bottom line: Rules for claiming credits and deductions are very specific, so visit irs.gov or consult a tax pro to make sure you qualify for these tax breaks.
Download These Free Tax Apps
Ask a CPA (iOS) Get instant answers to thousands of specific tax questions.