Taking deductions can help offset the amount of taxes you owe and may even help you get money back. The good news is, there are tax deductions often overlooked by people who could use them. Knowing what you can use as deductions will help ensure you get the most for your money at tax time.
Jury Duty Compensation
If you're called in for jury duty and your company continues to pay your salary while you're on jury duty, your company may request you give it your jury duty pay to help offset your salary while you're gone. The government requires you to pay taxes on jury duty compensation. If you turn your jury duty compensation over to your employer, you can deduct the full amount from your taxes.
Looking for a Job
If you are actively looking for a job, you can deduct the expenses of doing so from your taxes at the end of the year. Some of the items you can deduct include food, lodging and supplies associated exclusively with looking for employment. This can be particularly useful if you travel when looking for work.
Health Insurance for the Self Employed
If you are self-employed and purchase health insurance for yourself and a spouse, you can deduct the full amount of the cost of that insurance. Health insurance for the self-employed can be expensive, so the ability to deduct the full cost from your taxes at the end of the year can help offset the cost of doing business for yourself.
Child Care Credit
Take a child care credit, which reduces the amount of taxes you owe dollar for dollar. This means you can deduct the full cost of childcare -- babysitter or daycare -- that you spend in a year for each child you have. With the cost of childcare, this can be a substantial decrease in the amount of taxes you owe.
State Taxes Previously Owed
If you owed and paid state taxes the previous tax season of the one you're filing, you can use the amount of the taxes you paid as a deduction, as well as any state income tax withheld from your paychecks.
American Opportunity Credit
The American Opportunity Credit is good until the 2012 tax season only. It allows for the decution of up to $2,500 of any expense associated with going to college. This credit is available to anyone whose adjusted income is $80,000 or less.
Making Work Pay
This credit allows single tax filers to deduct $400 from the amount of taxes owed, which doubles at $800 for married couples. Ineligibility for this credit comes at $190,000.
State Automobile Taxes and Medical Expenses
You can take a deduction for automobile taxes paid if you live in a state where yearly taxes are required on your automobile. Not all states require this yearly registration fee. If yours does, take advantage of claiming it as a deduction on your taxes. Medical expenses are also tax deductible. This includes gas expenses for trips to a medical facility, the cost of crutches or other equipment for disabled persons. Under medical expenses, nurse fees and drug and alcohol rehabilitation services are also deductible.
Energy-Based Home Improvements
If you've been considering home improvements on your house, consider making improvements meant to conserve energy.Up to 30 percent of the cost of these home improvements can be used as deductions on your taxes. The cap for this deduction, as of 2010, is $1,500. Skylights, furnaces, water heaters, air conditioners, doors and other improvements with an energy efficiency are qualifying, as well as any improvements intended to conserve energy or cut fuel costs.
The home buyer credit is a big tax break. A first-time homebuyer gets an $8,000 tax credit toward lowering taxable income and long-time homebuyers received a $6,500 credit.